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  • Reliance Life Group Leave Encashment Plus Plan

    Reliance Life Insurance

    Reliance Group Leave Encashment Plus Plan is a non-participating fund based group unit-linked insurance plan that is aimed towards fund management services that provide for leave encashment benefits of employees. Through fund management and administration done by themselves, employers can now have a simpler way of fulfilling the needs of leave encashment without any adverse cash flows at inopportune times. The plan offers the flexibility to choose fund options and also provides a life cover for the members under the plan.

    Key features of Reliance Group Leave Encashment Plus Plan:

    This plan from Reliance has the following features

    • Leave encashment funds - This is the amount of funds received by an employee or his/her nominee in case of resignation, retirement, disability or death of the employee while the employer is the active policyholder with Reliance Life. The collective amount in the account is a result of the investment of the contributions in the fund options chosen. The minimum insured death benefit will be Rs. 1000 and there is no maximum cap on the same
    • Premium paying term - Premiums under this policy are payable on a flexible basis, as and when new members get added or as the fund requirement increases
    • Premiums - Under this plan, the master policyholder or the employer needs to pay a minimum of Rs. 1,00,000 per year in order to continue availing the benefits of the policy. There is no maximum cap for the annual premium than can be paid towards annual leave encashment contribution
    • Premium paying modes - The premiums can be paid as and when the requirement arises to stabilise the contribution amount in the account
    • Premium paying method - Premiums for the policy can be paid through internet banking, ECS, cheques, demand drafts, credit cards and other applicable transaction medium
    • Basis - This is a group insurance product which allows the policyholder to effectively have a resource for providing for the leave encashment needs of the employees and have a seamless fund management done through outsourcing
    • Policy validity - The policy’s validity is for a year and it gets renewed automatically for the subsequent policy term provided there are enough funds in the account
    • Free look period - The policy can be returned within a period of a maximum of 15 days (30 days in case of distance marketing) and the premium can be refunded minus the cost incurred by the insurer

    Benefits of Reliance Group Leave Encashment Plus Plan:

    This policy from Reliance Life is aimed at employers aiming to provide for leave encashment benefits for their employees. The following are a detailed list of the benefits offered under this policy -

    • Fund Management Services - Allocating funds for meeting the needs of leave encashment can be challenging. With four fund options, Reliance Life offers the employer or master policyholder a healthy mix of risk and benefits that can cater to the different investment needs. Risk levels and benefits can be judged perfectly and the employer can accordingly choose where the contributions are invested, allowing for a lucrative leave encashment benefit for every employee
    • Free Fund Switches - Investment in funds is always risk ridden and the needs of employers might change from time to time. Keeping the same in view, Reliance allows up to four free switches of investments across funds in a policy year
    • Surrender Benefit - The policy gets renewed automatically at the end of a policy anniversary but in case of a deficit in the fund or surrender of the policy, Reliance Life will pay a surrender value or discontinuance that is equal to the fund value less any applicable charges
    • Tax benefits - Leave encashment benefit as and when paid by the employer will be deductible from his income and the benefit received by the employee at retirement is subject to tax relief. These conditions are dependent on the prevailing tax laws

    Eligibility Criteria for Reliance Group Leave Encashment Plus Plan:

    Group size, entry ages and maturity periods for this plan and the criteria of eligibility for this plan can be illustrated in the table below -

    Parameters

    Minimum

    Maximum

    Size of the Group

    10 members

    No Limit

    Age at Entry (in years)

    18

    65

    Age at Maturity (in years)

    19

    70

    Investment of Funds in Reliance Group Leave Encashment Plus Plan:

    This group policy is a unit linked plan and being fund based, it allows the contribution towards leave encashment to be invested in a group of four different funds. These funds have the following asset ratios and risk categorization -

    Fund Name

    Aim of Investment

    Asset Category

    Range of Allocation (%)

    Target (%)

    Group Balanced Fund 4

    Returns to exceed rate of inflation in the long run. Low to moderate risk.

    Money market instruments

    0-10

    0

    Debt securities

    0-85

    80

    Equities

    0-25

    20

    Group Equity Fund 4

    Real rate of returns will be high in the long run. High risk.

    Corporate bonds and other debt instruments

    0-10

    0

    Equities

    0-100

    0

    Group Corporate Bond 3

    Returns to exceed inflation rate while taking some credit risk. Low to moderate risk.

    Money market instruments

    0-10

    0

    Corporate bonds and other debt instruments

    0-100

    100

    Group Money Market Fund 2

    Maintain capital value of all contributions. Low risk.

    Money market instruments, liquid mutual funds and bank deposits

    100

    100

    Charges under Reliance Group Leave Encashment Plus Plan:

    This group policy has a few applicable charges, right from fund management to the government applicable service charge. All the different funds available under this policy have a fund management charge of 0.75% subject to a maximum of 1.35% per annum. In case the four free fund switches have been utilised, every other fund switch will attract a charge of 0.1% of the amount that is to be switched, subject to a maximum of Rs. 5000. Surrender and/or discontinuation charges will be in accordance with the guidelines put forth by the IRDA. As of now, surrender/discontinuation charge within the first three years of the policy will be a minimum of 0.05% of the fund value or Rs. 5,00,000. In case the surrender or discontinuation happens from the 4th policy year onwards, no charges will be levied.

    How Reliance Group Leave Encashment Plus Plan Works?

    Spandan Systems is a manufacturing company that has recently opened up a factory with refurbished machinery and has hired a fresh batch of 120 people. Earlier, due to an outsourced model, their management could easily handle leave encashment among themselves. This time, Spandan Systems decides to use the benefits offered by Reliance Group Leave Encashment Plus Plan.

    The company shares the data sheet of its employees with Reliance Life and chooses the Group Balanced Fund 4 as its investment option. Additionally, Spandan Systems opts for a sum assured of Rs. 50,000 per person for the 120 people who joined as the factory workforce.

    Based on the regular contributions from Spandan Systems and its trustees, the account will keep investing portions of money into various assets and will pay out an applicable encashment benefit to employees post their employment at the company.

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