Future Generali Group Gratuity Plan

FUTURE GENERALI Group Gratuity Plan

1. AboutSpecifically designed for companies that offer gratuity benefit to their employees

2. Gratuity BenefitsAs per scheme rules

3. Death BenefitsRs 5,000/- per annum

4. Member's Age at Entry18 to 69 years

5. Minimum Initial Contribution AmountRs 5 Lakhs

6. Mode of PaymentYearly/Half-Yearly/Quarterly

7. Minimum Group Size10

8. Additional Term CoverYes

9. Tax BenefitYes

Future Generali Group Gratuity Plan

It is a known fact that the Gratuity Liability tends to increase with time as the salary and the tenure of the employees increases. An employer can pay out the gratuity proceeds from his current revenue (on a PAYGO basis) but this can cause financial strain at times. Thus, a prudent and tax efficient way of meeting Gratuity Liability is to ascertain the Liability, set up a Gratuity Fund and pay contributions as and when required.

Future Generali Group Gratuity Plan is a non-linked non-participating group gratuity product offering fund management.

This plan offers interest income which gets credited to the policy at the end of financial year. The interest amount once credited to the policy account will become guaranteed.

Hence, you build a Gratuity Fund systematically, benefiting from investment returns which are safe and stable and thus provide the benefits in a cost effective manner.

The Future Generali Group Gratuity Plan brings you a host of features that can assist you in meeting your obligation in a systematic and cost effective manner.

The liability of Future Generali India Life Insurance Company Limited (FGILICL) at any time will be limited the balance in the policy account.

HOW IT WORKS

1. Actuarial valuation will be carried out at the time of inception and at regular periodic intervals to determine your gratuity liability. You are expected to pay the contribution accordingly.

2. Option for newly setup Gratuity Trust to pay for their past liabilities over a period of five years

BENEFITS

1. We offer you value by providing a platform of a large pooled fund providing smooth returns, safety through diversification backed by our in-house investment expertise.

2. Flexibility in payment of premium; you can pay contributions yearly, half-yearly or quarterly

3. Liquidity management - Allows liquidity; money available anytime to meet benefit payout

4. The plan has a uniform Life cover of Rs. 5000 per member

Target Group

For employer who want to effectively manage their gratuity liabilities



Tax Benefits

As per the applicable tax laws. Tax benefit is subject to change in tax laws from time to time.

[For Employer]

1. The initial and Annual contributions made through an approved Gratuity trust can be claimed as business expenditure as per the provisions under section 36 (1) (v) of the Income Tax Act, 1961 subject to maximum limit of 8.33% of annual salary in respect of each member.

2. Income of investments is exempt from tax under section 10(25)(iv) of the Act.

[For Employee]

1. Gratuity benefits are tax free up to Rs. 20,00,000 in the hands of employee.

2. The contribution made by the employer is not included in the value of taxable perquisites in the hands of the employee.

3. Any death benefit under the Group Term Insurance is tax-exempt under section 10 (10D) of the Income Tax Act, 1961

These tax benefits are as per our understanding of the Income tax Act 1961 and is subject to change. For further details please consult your tax advisor.

Contributions

The contributions made under this plan shall be made in accordance with the funding requirements as per the scheme rules. The trustee or employer or policyholder shall be required to confirm that such funding is required as per extant accounting standard governing the measurement of long term employee benefits.

The plan does not allow any top-ups, unless required to address the underfunding of the scheme as per extant accounting standard governing the measurement of long term employee benefits.

Interest Rate

An Interest rate will be declared by the company at the end of each financial year. The interest rate will be credited to the policy on a pro-rata basis based on the number of days the fund has been invested with the company. An interim rate shall be declared at the start of each financial year for exits during the financial year for which interest rate is not yet declared. The interest amount once credited to the policy account will be guaranteed.

The interest rate credited to each fund and expenses charged to such funds shall be in accordance with the Board approved policy of the company.

CHARGES APPLICABLE UNDER THE POLICY

Mortality Charge

These are annual charges. Mortality charges will be deducted at the start of every month from the policy account. Monthly charge would be 1/12th of annual charge.

Below mentioned are the sample annual mortality charges for various age groups for Rs.5000 sum assured for Life Cover



These charges will be subject to applicable tax, if any.

Surrender Charge (Penalty)

Master Policy Holder can surrender the policy any time by giving written request to FGILICL. The surrender penalty will be equal to 0.05% of the total policy account value subject to maximum of Rs. 500,000 /- if the policy is surrendered within the third annual renewal of the policy. Hence the surrender value will be equal to the policy account value less the surrender penalty, if any.

If the policy is surrendered after the third annual renewal, then there will be no surrender penalty. This charge will be subject to applicable tax, if any.

Once the policy is surrendered and the surrender value is paid, the Company shall cease to be liable for any benefit payable under the policy and the policy cannot be reinstated.

Market Value Adjustment

No Market Value Adjustment is applicable.

Policy Account Value

The policy account value depicts the accrual to the policyholder account.

The Company shall maintain a Policy Account of the policy to which will be credited:

1. All the contributions, received from the trustees on the date when such contributions were received by the Company;

2. Amounts transferred in from a former gratuity scheme with effect from the date such amounts were received by the Company; and

3. Interest income as on 31st March every year (or on date of surrender in case of surrender of policy), if any.

Further, the policy account will be debited with:

1. All benefits as defined in the scheme rules paid in respect of members as on the date when paid by the Company;

2. taxes, duties or surcharges of whatever description levied by any statutory authority;

3. interest or late fee, if any, payable on the benefits

4. surrender charge (penalty) if any

5. Mortality charges for life cover

Termination

The Policyholder should maintain a minimum balance of Rs 1 lakh in the policy account.

The company will send a notice to the Policyholder if the policy account value falls below Rs 1 lakh. The Policyholder can get a valuation done as per extant accounting standard governing the measurement of long term employee benefits to see if the scheme is underfunded or not.

If the scheme is not underfunded, the policy will continue as it is.

If the scheme is underfunded, then the company will give the Policyholder 30 day's period to pay additional contributions to address the underfunding of the scheme. If additional contributions are not received within the stated period, then the company will terminate the policy and refund the entire amount available in the policy account to the Policyholder. Thereafter the Company shall cease to be liable for any benefit payable under the policy. Once policy is terminated, it cannot be reinstated.

Variability of Charges

1. The surrender charge (penalty) and mortality charge is guaranteed

Any change in amount or rate of charges as stated above will be subject to IRDAI approval.

Nomination

Nomination will be allowed as per section 39 of the Insurance Act, 1938, as amended from time to time, for receipt of gratuity benefits in the event of the death of the member. Any nomination or change of nomination of the beneficiaries will be maintained by the Employer or Policyholder. In the event of death of the member, the Company will pay the gratuity benefits to the Employer or Policyholder. In case the gratuity benefits are to be paid directly to the member's beneficiary, the Employer or Policyholder should advise the Company in writing of this request along with the beneficiary details.

Grace Period

Not available under this plan

Revival

Not available under this plan

Loan

Loans are not available for this plan

Free Look Period

In case the Policyholder disagree with any of the terms and conditions of the policy, then the policy can be returned to the Company within 15 days of its receipt for cancellation, stating the objections. Future Generali will refund the policy account value after the deduction of the policy stamp charges and the cost of insurance for the period on cover up to the date of cancellation.

Section 41 of Insurance Act 1938, as amended from time to time, states:

1. No person shall allow or offer to allow, either directly or indirectly, as an inducement to any person to take out or renew or continue an insurance in respect of any kind of risk relating to lives or property in India, any rebate of the whole or part of the commission payable or any rebate of the premium shown on the policy, nor shall any person taking out or renewing or continuing a policy accept any rebate, except such rebates as may be allowed in accordance with the published prospectuses or tables of the insurer.

2. Any person making default in complying with the provisions of this section shall be liable for a penalty which may extend to ten lakh rupees.

Section 45 of Insurance Act, 1938, as amended from time to time, states:

1. No Policy of Life Insurance shall be called in question on any ground whatsoever after the expiry of 3 years from the date of the policy i.e. from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later.

2. A policy of Life Insurance may be called in question at any time within 3 years from the date of issuance of the policy or the date of commencement of risk or the date of revival of the policy or the date of the rider to the policy, whichever is later, on the ground of fraud.

For further information, Section 45 of the Insurance laws (Amendment) Act, 2015 may be referred.