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Aviva New Group Leave Encashment

Overview

Several employers offer their employees the option of encashing residual leave while in service or due to death, resignation or termination. Aviva’s New Group Leave Encashment (NGLE) Plan allows employers to fund their leave encashment liability by outsourcing the actuarial valuation and fund management activities. An employer, can therefore, meet his financial outgo in terms of leave encashment in a more productive way. What’s more, this plan also provides an insurance cover with a Sum Assured of Rs.1000.

A unit-linked plan, Aviva life New Group Leave Encashment Plan, offers a more flexible way to fund employees’ leave encashment liability. This plan offers a more cost-effective and systematic way of payment of lump sum towards leave encashment liability, cover of Rs.1,000 in the event of death while in service in addition to the option to choose from various funds. This plan also provides the switching option between several funds sans additional charges.Under this plan, the investment risk is borne by the master policyholder.

Eligibility Conditions of Aviva New Group Leave Encashment Plan

Age

Minimum: 18 years

Maximum: 70 years (last birthday)

Key Features

Type

Unit-linked non-participating plan

Basis

Employer is the master policyholder

Coverage

  • Minimum: 10 members. If leaves are encashed while in service of a member or in the event of case of death, retirement, resignation/termination, the master policyholder is paid an amount equivalent to the amount payable to the member, by cancelling equivalent units from the account of the master policyholder.

  • Upon death of a member, an additional Rs.1,000 is paid.

  • Master policyholder can get the units cancelled from funds

  • Maximum liability to make any payment is limited to the fund value

Risk Cover

Rs.1,000 (mandatory)

Contribution/Premium

Minimum: Rs.100,000 (inception)

Mortality Premium

Paid through cancellation of units from master policy account. The Mortality Premium is payable separately by master policyholder and will not be deducted through cancellation of Units. The mortality premium may be revised upon the renewal of life cover on the basis of age, risk profile or claims.

Funds

Seven fund options available as listed below:

Name of the fund

Objective of the fund

   

Pension Cash

(Low risk)

Protects nominal value of investments

   

Pension Debt

(Low risk)

Capital growth progressively

   

Pension Secure

(Low risk)

Progressive returns on investments

   

Pension Balanced (Medium risk)

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

   

Pension Growth Fund

High capital growth by investment in equity markets

   

Pension Enhancer Fund (High risk)

Increased investments in equity markets

   

Pension Short-term debt (Low risk)

Offers progressive returns

   

Pension Income Fund (Medium risk)

Progressive returns by investment in safe funds

   

Sum Assured

Rs.1,000 per employee (fixed)

Renewability

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

Surrender Value

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

If the master Policy is surrendered within first policy year, the surrender charge is 0.05% of fund value (maximum of Rs.5 lakh). However, there will be no surrender charge thereafter.

Surrender Value = fund value - surrender charges

Allocation Rate

Allocation rate, under this plan is defined as the proportion of contributions used to buy units. Allocation charge = 100% - allocation rate

Freelook period

15 days from the receipt of master policy.

Grace period

30 days

Loan

Not available under this plan

Partial Withdrawals

Not permissible under this plan

Benefits of Aviva New Group Leave Encashment Plan

Tax Benefits

Tax benefits may apply according to provisions of the Income Tax Act, 1961. Tax benefits are subject to change.

Advantages

  • Master policyholder can invest in any one or combination of funds

  • Master Policyholder can vary the allocation proportions at any time

  • Master Policyholder can switch from one fund to another fund (partly or fully) without paying any additional charges

Charges of Aviva New Group Leave Encashment Plan

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

Service tax

As notified by the government from time to time

 

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GST of 18% is applicable on life insurance effective from the 1st of July, 2017

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