Aviva Group Gratuity Advantage

Overview

Gratuity is a statutory benefit for employees according to the Payment of Gratuity Act, 1972. If an employee has at least five years of continuous service, he or she is eligible for 15 days pay for each year. A group gratuity fund offers tax benefits to employers in addition to providing financial security to employees at the time of their retirement, leaving an organisation or death.

A group unit-linked life insurance policy, Aviva Group Gratuity Advantage is aimed at the corporate sector. Aviva Group Gratuity Advantage can be customized to avail of various benefits in addition to the statutory obligations. This plan provides a lump sum to employees or their nominees, tax benefits to employers and Rs.1,000 in the event of death of the policyholder in service. This Aviva life Insurance plan offers customers the flexibility to choose from various unit-linked funds available in addition to the option of transferring previous service contributions.

Eligibility Conditions of Aviva Group Gratuity Advantage

Age

Minimum: 18 years

Maximum: 74 years (last birthday)

Key Features of Aviva Group Gratuity Advantage

Type

Group unit-linked non-participating life insurance policy

Basis

Master Policyholder: Employer or trustees

Coverage

Minimum: 10 members. The following table shows the coverage under this plan.

Death

Retirement

Resignation/

Termination

Additional amount equal to the Sum Assured

is paid

Master policyholder is paid an amount equal to the amount payable to a member, by canceling units of equal amount from the master policyholder's account

Master policyholder can get the units cancelled. The allocation proportion last specified by master policyholder will be used

     

Policy Term

One year

Contribution/Premium

Minimum: Rs.1 lakh (inception)

Trustees can pay contributions with regards to past service liability in 5 installments annually

Premium Payment

  • Premium is determined on several factors such as the group’s size, age, occupation, individual members’ sum assured, payment frequency. The rate of premium is quoted after data regarding individual employees is received.

  • Premium (cost of life cover and riders) is paid by the master policyholder and will be collected separately and not deducted through units’ cancellation.

Sum Assured

Minimum: Rs.1,000 (per head/employee)

Maximum: Rs. 1 crore (per head/employee)

For the first Rs.1,000, no mortality charges will be deducted

Policyholders can increase or decrease their Sum Assured, subject to underwriting requirements

Funds

Seven fund options available as listed below:

Name of the fund

Objective of the fund

Pension Cash

Protects nominal value of investments

Pension Debt

Capital growth progressively

Pension Secure

Progressive returns on investments

Pension Growth

Capital growth by investments in equity markets

Pension Balanced

Capital growth by investing in debt and equity markets and ensuring balance between risk and return

Pension Short-term debt

Progressive returns

Pension Income

Progressive returns by investment in safe funds

Renewability

5 years from the last date of lapse, failing which, the plan stands terminated

Surrender

This plan can be surrendered by giving a notice 90 days prior to termination.

Allocation Rate

Allocation rate, under this plan is defined as the proportion of contributions used to buy units.

Freelook period

15 days

Grace period

30 days

Loan

Not allowed

Partial Withdrawals

Not permissible

Benefits of Aviva Group Gratuity Advantage

Tax Benefits

According to Income Tax Act 1961, the following tax benefits are available under this plan:

  • Premiums paid up to 8.33% of a salary package in a year are tax exempt.

  • Under section 10(10)D, gratuity received up to half-month's average salary for each service service year (maximum of Rs.10 lakh) is exempt.

  • Benefits paid on death are exempt.

Benefits

  • Gratuity Benefit is paid by redeeming units in allocation proportion.

  • Upon death of the member, besides the gratuity benefit, Sum Assured and Rider benefits will also be paid.

  • Maximum liability under this plan is limited to the fund value

Charges

The following table lists out the different types of charges applicable under this plan

Allocation Charge

Policy Year

Allocation Rate

1

100%

2

100%

Surrender Charge

Policy Year

Charge

1

Lower of 0.05% of

fund value or Rs.5 lakh

2

Nil

Fund Management Charge

0.08% p.a for all funds

Switching Charge

Nil

Riders

Group Double Accident Benefit (DAB) Rider

Premium will not depend on the member’s age and will be paid by the master policyholder separately

Group Permanent Disability (PTD) Rider

Premium will be paid by master policyholder separately

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