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  • Kotak Superannuation Group Plan II

    Kotak Life Insurance

    Overview

    This is a unit linked insurance plan from Kotak. Retirement savings are only going to take you so far, and this plan helps you save a sizeable amount for retirement. Companies can make use of this kotak life plan for benefits for themselves as well as their employees. Through a collaborated regular monthly investment system between employer and employee, this plan aims at securing your post-retirement finances. With one move, employers can increase employee retention and help them plan their retirement, and employees in turn can establish a safe superannuation fund. It’s also worth noting that the investment risk is borne by the policyholder.

    The fund has two schemes:

    1. Defined Benefit Scheme: Under this scheme, the employer funds the contributions towards a specific retirement benefit, which is based on the employee’s salary and years of service. Deficits in amount available through the scheme to be paid to the employee will be handled by the employers.

    2. Defined Contribution Scheme: Under this scheme, employers and employees both collaborate and contribute towards the accumulation of funds. The rate at which the contributions are added are usually considered as a percentage of the employee’s salary. This scheme is more relevant in today’s fast paced working environment where the work culture includes the occasional shifting of jobs and career paths. The fund value will be payable at the time of benefit payment.

    Eligibility Conditions for Kotak Superannuation Group Plan II

    The plan comes with two options, the Defined Benefit Scheme and the Defined Contribution Scheme, for those companies meeting the following eligibility criteria:

    Parameter

    Minimum

    Maximum

    Group size

    10

    No limit

    Entry age (last birthday)

    18 years, or as specified in the Trust Rules, whichever is higher.

    74 years or normal Retirement Age as specified in the Trust Rules, whichever is lower.

    Maturity age (last birthday)

    -

    75 years or normal Retirement Age as specified in the Trust Rules, whichever is lower.

    Term

    1 year (indefinitely renewable)

    1 year (indefinitely renewable)

    Initial contribution for Defined Benefit

    Rs.2,00,000 at inception.

    No limit

    Initial contribution for Defined Contribution

    Rs.6,000 per member, per year, at inception.

    No limit

    Key Features of Kotak Superannuation Group Plan II

    Type

    Unit Linked Superannuation Insurance Plan

    Coverage and benefits

    Defined Benefit Scheme:

    • On surrender of the policy: 100.1% of the total contribution, net of withdrawal already mad from the account.

    • On death: Subject to availability of funds in the respective unit fund of the employer’s superannuation fund. Any deficit here will be covered by the employer.

    • Termination / Resignation: Benefit as indicated by the rules of the superannuation fund.

    Defined Contribution Scheme:

    • On retirement or death: 100.1% of the total contribution. This assured benefit is not available on exits from the scheme other than death. On retirement, the member has the option to choose from the various available annuity options.

    • Termination / Resignation: Benefits as indicated by the rules of the superannuation fund. Employees also have the option of transferring the superannuation account to the new employer, if that’s been allowed.

    Premiums

    • Premiums paid are allocated to the Group Secure Capital Fund.

    • Premiums are paid by the employer and the employee and are determined a percentage of the employee’s salary.

    • Premiums paid are subject to investment risks that can be associated with capital market fluctuations.

    • 0.3% premium allocation charge will be levied as a contribution amount.

    Renewability

    The policy is renewable indefinitely.

    Add-ons

    Monthly Regular Additions:

    • These are added to the scheme.

    • Percentage of add-on varies depending on the fund size at the start of the month.

    • The rate of the additions is between 0.05% and 0.30% p.a.

    • They are expressed as units and are added to the unit fund at the end of the month.

    Investment Options

    Because of varying financial goals and risk appetites, Kotak Life insurance offers the specially designed Group Secure Capital Fund to augment the performance of investments.

    Fund / Fund Composition

    Short-term investments.

    Government guaranteed securities

    Other debt securities

    Group Secure Capital Fund

    0 – 40%

    0 – 75%

    25% - 100%

    The investment philosophy incorporates the fundamental principles of transparency, flexibility and a well-defined investment portfolio.

    NAV Computation

    The policyholder has the power to select funds in which to invest the contributions, according to these rules:

    • In the case of premiums being paid by outstation cheques, the NAV of either the clearance date or the due date (whichever is later) will be used to allocate the premium.

    • All transaction requests that are received before the cut off time will be allocated to the same day’s NAV.

    • All transaction requests that are received after the cut off time will be allocated to the next day’s NAV.

    • The cut off time will be 3:00PM, which may vary as per IRDA guidelines.

    Net Asset Value (NAV) = Market value of investments held by the fund + Value of current assets – value of current liabilities / Number of existing units on the valuation date (before the creation / redemption of units).

    Annuity Options

    Employers and members can opt for available annuity options at the prevailing annuity rates, subject to the rules of the superannuation scheme. The annuity options available under the Kotak Group Annuity Plan are:

    • Lifetime annuity – which is payable to the member for life.

    • Lifetime annuity with cash back – which is payable to the member for life, but in the event of his/her death, the amount paid to purchase the annuity will be payable to the nominee.

    • Lifetime annuity with term guarantee of 5/10/15/20 years – The annuity will be paid for the guaranteed term irrespective of the member’s death. Thereafter, the annuity will continue till the member is alive.

    • Last Survivor lifetime annuity – Annuity is payable for life, but on the death of the member or his / her spouse, annuity will be paid to the surviving spouse.

    New annuity options are made available by the insurer from time to time.

    In cases where superannuation funds are maintained with more than 1 insurer, employers have the freedom to purchase annuities from Kotak or any other insurer.

    Surrender of policy

    The policy can be surrendered by the master policyholder only after giving 3 months prior notice (in writing) to the insurer (Kotak). Once the notice period expires, Kotak will pay the current value of all the units on the date of surrender, after deducting surrender charges of 0.05%. The surrender charge will not be applicable if the policy is being surrendered after 3 policy years.

    Free look period

    Policyholders are given a 15-day free-look period, in which the policyholder can choose to continue the policy or return it back to Kotak.

    If the policyholder returns the policy within 15 days of receiving it, all premiums will be refunded after deducting stamp duty expenses. There is no 30-day option for free-look as this policy is not offered through any Distance Marketing channel.

    Suicide exclusion

    This is one of the few rare policies which does not include a suicide exclusion. Death benefit will be paid regardless of the nature of death.

    Benefits and Advantages of the Kotak Superannuation Group Plan II

    This fund offers exceptional benefits and advantages for employers and employees alike.

    Employer benefits:

    • Increase motivation and facilitate employee retention.

    • Funds received by trustees for an approved superannuation fund are exempted from taxation under Sec 10(25).

    • The amount of deductions available on the ordinary annual contribution to approved superannuation funds cannot exceed 27% of the employee’s annual basic salary for each year of service under Sec 36(1)(iv) - and this includes contributions to Provident Fund.

    Employee benefits:

    • Any employee contributions towards a superannuation fund qualifies for a tax deduction under Sec 80C of the Income Tax Act, 1961.

    • Upon retirement, the benefit will be disbursed as per the scheme rules of the employer’s superannuation scheme and will be tax free.

    • In the unfortunate event of your death, the death benefit paid will be exempted from taxation under Sec 10(13) of the Income Tax Act, 1961, and will be as per the scheme rules of employer’s superannuation scheme.

    • Contributions made by employers to approved superannuation schemes up to Rs.1,00,00 will not be included under perquisites of employees under Sec 17(2)(vii).

    • When you withdraw from your service, or shift jobs, you will have the option to transfer this superannuation account to your new employer, if it’s been allowed as per the scheme rules of the existing superannuation fund.

    Charges Involved in the Plan

    Premium Allocation Charges

    0.3% of the contribution amount.

    Administration Charges

    Nil.

    Fund Management Charges

    0.90% per annum.

    Surrender Charges

    0.05% of the fund, capped at Rs.5,00,000. No charge if policy is being surrendered after 3 years.

    Switching Charges

    None. There is only one plan.

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