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  • HDFC Life Group Variable Employee Benefit Plan

    HDFC Life Insurance

    Overview

    The HDFC Life Group Variable Employee Benefit plan is a plan that allows employers to effectively carry out schemes that benefit employees in a transparent manner. This plan from HDFC Life allows employers to provide schemes such as gratuity and superannuation and recognize the valuable contribution made by the employees towards the company. It serves as a motivator and helps retain for employees and helps employers retain their staff and cut down on attrition. Such plans also help to motivate the workforce and thereby increase the productivity.

    Eligibility Criteria of HDFC Life Group Variable Employee Benefit Plan

    • The employer will be the master policyholder.
    • The term of the policy is indefinite. It can be renewed each year.

    Criteria

    Minimum

    Maximum

    Size of the group

    10 members is the minimum size

    No maximum limit

    Age at Entry

    16 years as at last birthday

    75 years as at last birthday

    Premium

    Each policy has a minimum of RS 5,00,000

    No maximum limit

    Features of HDFC Life Group Variable Employee Benefit Plan

    1. The plan is a non participating variable insurance plan.
    2. The policy is of a group basis.
    3. The policy offers the option of maintaining individual member accounts in case of superannuation schemes.
    4. There will be a guaranteed addition of 1% p.a for the entire term of the policy. This is also known as the minimum floor rate.
    5. In addition to the minimum floor rate, the plan also offers a bonus or additional interest rate that is declared at the beginning of every financial quarter and is credited to the policy account
    6. The additional interest rate is credited after the minimum floor rate is credited and is a non zero positive interest rate.
    7. The policy offers income tax benefits to both employer and employee under the applicable income tax laws
    8. The policy also provides for residual additions. These additions are positive non zero additions and if any are credited, they would be done towards the end of every financial year.
    9. The policy covers various employee benefit schemes such as Gratuity, superannuation, leave encashment among others.
    10. The policy attracts a mortality charge.
    11. The policy has a free look period of 15 days.
    12. The policy allows for alterations.
    13. The scheme administrator maintains the nomination records and in accordance with these records, the benefits will be processed through the master policyholder.

    Benefits of HDFC Life Group Variable Employee Benefit Plan

    The benefits for Gratuity, encashment of leaves and other schemes that benefit employees are as follows

    Event

    Benefit

    Death of a member

    In the unfortunate case a scheme member dies, then the benefit paid to the nominee will fall in line with the rules set forth by the employer and is subject to a maximum value equal to the value of the policy account. If life cover has been chosen, then the death benefit is an additional RS 1000 per member

    Exit due to resignation, early retirement or termination

    The benefit paid will fall in line with the rules set forth by the employer and is subject to a maximum value equal to that of the value of the policy account

    The benefits for superannuation is as follows

    Event

    Benefit for a policy account

    Benefit for Individual member accounts

    Death of a member

    The benefit paid will fall in line with the rules set forth by the employer and is subject to a maximum value equal to that of the value of the policy account or the assured benefit

    In the unfortunate event of the death of a member, the nominee will receive a death benefit which is equal to higher of the value of the account of the member or the assured benefit

    Exit due to resignation, early retirement or termination

    The benefit paid will fall in line with the rules set forth by the employer and is subject to a maximum value equal to that of the value of the policy account

    The benefit paid to the member is equal to the account value of the member

    Maturity or vesting of the policy

    The benefit paid will fall in line with the rules set forth by the employer and is subject to a maximum value equal to that of the value of the policy account or the assured benefit

    In the event of the policy reaching maturity, the member will receive the maturity benefit which is equal to higher of the value of the account of the member or the assured benefit

    The benefits of the plan also include

    1. A minimum floor rate is 1% p.a. This is guaranteed for the entire term of the policy and is credited at the end of every financial quarter.

    2. An additional interest rate which is calculated as 95% of the gross yields expected to be earned on the backing assets minus the minimum floor rate is credited after the floor rate has been credited. This additional interest rate is a non zero positive rate and is declared at the beginning of every financial quarter.

    3. At the end of every policy year, residual additions that are non zero positive additions, if any are credited to the policy account. These residual additions are determined such that the reduction in yield requirements are not breached. These reductions are set to 80 bps.

    4. The policy allows for opting for additional funding only in the first year of the contributions made to the policy. There are 3 options for additional funding which are 3%, 2% or 1% of the contributions as additional funding. The additional funding will be recovered by deducting a percentage of contributions on which additional funding was opted from the account value.

    5. The recovery period is mentioned below

    Funding Option

    Reduction in % p.a

    Period of recovery

    3% of contributions

    0.60%

    6

    2% of contributions

    0.60%

    4

    1% of contributions

    0.60%

    2

    Charges

    The policy attracts a mortality charge which is calculated as RS 1 for every RS 1000 of sum assured. This charge is not inclusive of statutory fees such as service tax.

    Premium Discontinuance

    In the case where the policyholder would like to surrender the policy the surrender benefit where the individual member level accounts are maintained with HDFC is equal to the value of the policy account. The surrender benefit for policy where the individual member accounts are not maintained by HDFC is equal to the aggregate account value of all members.

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