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  • Kotak Gratuity Group Plan

    Overview

    This is a group insurance plan that can be used by employers to take care of their gratuity liabilities. it is meant to be for the employer-employee groups and the initial contributions towards this plan are made by the employers. It is beneficial to both employers and the employees and can include things like tax benefits and advantages of growth provided by investments made in the equity and money markets. The investments in this ULIP are made in 6 different funds that range from secure to moderate in terms of their risk ratings.

    Eligibility Conditions of Kotak Gratuity Group Plan

    Minimum age

    The minimum entry age can range from 18 years to whatever is set by the scheme rules as long as it does not exceed 74 years.

    Maximum maturity age

    This too can be set according to the rules of the scheme but it cannot exceed 75 years.

    Group sizes

    Minimum: 10 employees

    Maximum: No limits

    Group type

    Employer-employee

    Key Features of Kotak Gratuity Group Plan

    Type

    Unit linked insurance plan

    Sum assured

    Minimum sum assured: Rs. 1,000

    Maximum sum assured: Can be defined under scheme rules.

    Coverage

    Death benefits: If one of the members of the group passes away, the death benefit paid will be the gratuity settlement as per the trust rules along with the sum assured.

    Survival benefits: The survival benefits with this plan is the gratuity that is payable to members of the group.

    Basis

    Group plan

    Premiums

    Minimum: Rs. 2 lakhs at inception

    Maximum: No limits

    Premium paying term

    Annual, half yearly, quarterly, monthly or lump sums at intervals set by policy terms in conjunction with Kotak Life Insurance’s approval.

    Policy validity

    1 year

    Renewability

    Annual

    Bonuses

    NA

    Other features

    • Free look period: The freelook period is 15 days from the date of receiving the policy documents.
    • This plan does not allow for any partial withdrawals
    • There is no policy administration charge for this policy.
    • The charge for premium allocation is 0.5% for premiums under Rs. 2 crore and nil for premiums above this amount.
    • The fund management charges range from 0.8% to 1% per annum.
    • There are no charges levied on switching and redirection.

    Benefits/Advantages of Kotak Gratuity Group Plan

    The benefits under this scheme are twofold, one for the employer and the other for the employees.

    • The benefits for the employers are

      • Any income that is generated through investments in an approved gratuity fund will be exempt from tax under Section 10(25)(iv).
      • Contributions made to an approved gratuity fund can be shown as deductible under section 36 (1)(v) of the IT Act.
      • This plan offers a range of 6 funds in which to invest.
      • It allows for unlimited free switching between funds.
    • The benefits for employees are:

      • The plan is not limited to just a gratuity since it provides a sum assured in case of death.
      • The gratuity benefits received by government employees is tax free.
      • For non-government employees the limit for tax exemption is Rs. 10 lakhs.
      • Death benefits paid to employees will be exempt from tax.

    How the Plan Works?

    This is a plan that is meant for an employer-employee group so it has a master policyholder. That policyholder can appoint trustees for this plan, whose job it will be to look after the administration of this gratuity trust. When the kotak life policy is purchased, the master policyholder will make the initial contribution to the policy. A decision on what the sum assured under this policy will be, can also be decided at this time, provided that it is not lower than a minimum of Rs. 1,000. This contribution can then be invested in 6 funds. When a member of the group is eligible for gratuity or they leave the group, the gratuity payments to them will be made by redeeming the units held.

    Investment Options

    There are 6 funds, in which policyholders can invest or switch between. Each of these funds has its own risk ratings and splits on investments in equity and money markets. The funds that can be invested in are:

    Fund Name

    Risk Factor

    Group Balanced Fund

    Moderate

    Group Bond Fund

    Conservative

    Group Floating Rate Fund

    Conservative

    Group Gilt Fund

    Conservative

    Group Money Market Fund

    Secure

    Group Short Term Bond Fund

    Conservative

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