New Group Gratuity Cash Accumulation Plan offered by LIC is a non-participating, non-linked, fund-based variable insurance policy. With this plan, the employer can meet the obligation of statutory gratuity benefit to their employees. Contributions are paid by the policyholder each year to secure the gratuity benefit in order to provide life cover benefit, according to the rules of the policy. In this case, a single account is maintained for all the contributions made by the policyholder.
Eligibility Criteria for LIC’s New Group Gratuity Cash Accumulation Plan
In order to avail the New Group Gratuity Cash Accumulation scheme, the policyholder has to fulfill the following eligibility criteria:
|Entry age||18 years (completed)||75 years|
|Age at renewal||-||80 years|
|Contribution||Rs 10,000||No limit|
|Group size||10||No limit|
Key Features of LIC’s New Group Gratuity Cash Accumulation Plan
A few of the key features of New Group Gratuity Cash Accumulation scheme offered by Life Insurance Corporation (LIC) are mentioned as follows:
- Guaranteed interest rate
- Built in Insurance arrangement for the employees for future service
- Insurance cover for future service gratuity
- Fund management under interest accumulation system
- Claim settlement on exit as per company rules/gratuity act
- MIS related to Income Tax and trusts accounts and Actuarial valuation
Benefits of LIC’s New Group Gratuity Cash Accumulation Plan
The New Group Gratuity Cash Accumulation insurance plan offered by LIC has the following benefits:
- On death of the life insured during the term of the policy while in service before the retirement age, the sum assured, along with the gratuity benefit, under the basic plan is payable, provided the policy is active.
- On retirement of a Member, the Gratuity Benefit will be paid as specified under the scheme.
- Maturity Benefit: On surviving to the date of maturity, the life insured is paid an amount equal to the total amount of premium paid during the term of the contract. The amount will exclude the accident benefit premium and any extra premium, given the policy is active.
- The insurance premium paid towards the New Group Gratuity Cash Accumulation scheme is treated as deductible business expenses to the company.
How LIC’s New Group Gratuity Cash Accumulation Plan Works
XYZ Company adds 10 of its employees to the New Group Gratuity Cash Accumulation scheme offered by LIC. Mr Rohan, who works with XYZ, has taken a policy under the scheme for Rs 5,00,000 for a period of 10 years. He pays the premium annually. On the way to work one day Mr Rohan meets with an accident and passes away, during the policy term. His nominee will be paid the amount equal to sum assured, as per the rules of the policy.
The premium or contribution by the policyholder is done on an annual basis.
The policy offers Accidental Benefit Rider, where on the demise of the policyholder as a result of accident, during the policy’s term, an additional amount, that is equal to Accident Benefit Rider Sum Assured is paid to the nominee.
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GST of 18% is applicable on life insurance effective from the 1st of July, 2017