Insurance Loans24: GROUP INSURANCE

TYPES OF GROUP INSURANCE POLICIES

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The LIC of India has designed some group insurance
policies  for the benefit of working
class. Such  policies are described  briefly 
below.</div>
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  (1) Group (Term) Insurance
Scheme: It provide  life insurance
protection  to group of people. It is
offered  under One Year Renewable Group
term Assurance (OYRGTA) and  the
scheme’s  is renewed  every year after taking in to a account the
changes  in the size of group. The
following are the main features of this scheme. 
(a)  Master policy: A single
master policy is issued covering  all the
members of the scheme. The scheme is administered by the Employer Associations,
Societies, etc. called Nodal agencies, </div>
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(b) Premium : Premium rates are reviewed
on the basis  of claim experienced under
the individual scheme. ( C ) Eligibility : For all Non-employer employee  group scheme, the basic insurability
condition is that the member should be 
in good health on the date of entry. For the GI scheme of employer-
employee groups the  insurability   condition is that the member should not be
absent on  groups of sickness on the
entry date.  ( D)  Restrictions: The restriction under this
scheme relate to minium and maximum age limit for eligibility of cover (18to
60), participation of minimum percentage (75%) 
of eligibility  members  of the  groups at inception  and compulsory participation of all new members.  (E) 
Benefits: As the name term insurance indicates the amount cover is
payable in the event of death of the member. Nothing is payable on survival.
The cover amount  is either uniform or
graded. Uniform cover means that every member 
of the  groups is insured for the
same amount. The cover is decided  on the
basis of average size of the  group and
occupation or activity  which  group is engaged in. Graded cover  us usually granted to employer /
employee  groups because of general level
of health care and life style of the member being  satisfactory. For graded cover,  group can be divided  in to who three or four levels such as: </div>
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GROUP
INSURANCE SCHEME IN LIEU OF EDLI (EMPLOYEE’S 
DEPOSIT LINKED INSURANCE) : All employers to whom the Employee’s . Provident
fund and Mis. provision Act 1952 applies 
have a statutory liability to provide life insurance benefit to all
their  employees by subscribing  to Employees Deposit linked Insurance
(EDLI)  1976 i.e, Rs. 0.60 per Rs. 100
wage  bill of each employee. Under
EDLI  scheme, in the event of death  balance in PF account  of the deceased Rs. 60, 000, whichever is
lower . The Employees P.F and Mis . Provision Act also provides</div>
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that if  any scheme of
insurance gives more benefits than the EDLI the employer  is entitled to switch over to that scheme after obtaining  the approval of the  Central provident Fund Commissioner.  LIC’s 
GroupInsurance  Scheme in lieu of
EDLI has been accepted  as a better
alternative for EDLI. Under LIC’s  group
insurance Scheme. each employee is covered for a sum assured  of more than Rs. 60, 000 depending upon the current
salary and services put in from the very first 
day, irrespective  of the actual
balance in the provident Fun. 
ELIGIBILITY:  For LIC’  Group insurance  Scheme in lieu of EDLI  the insurability  condition is that he should be a member  of the Provident Fund’s Scheme  of the employer.  ACCIDENT BENEFIT: Double  accident benefit can be allowed to the extent
of the sum assured  for an extra premium
@ Rs. 0.75 per thousand. Benefits to Employer: (a) Premium under LIC’s Group
insurance scheme is usually less than the total contribution to provident
fund  authorities. (b) Settlement of
claim is quicker  ( C ) Premium paid is
treated as business expense  for income
tax purpose.  </div>
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 GROUP SAVINGS LINKED
INSURANCE (GSLI) scheme: The GSLI scheme offers insurance cover together with a
saving element. The GSLI scheme this scheme , is deducted from the monthly
salary of the member. The scheme is applied in Govt. Bodiespublic sector corporations and reputed  private companies who  keep accurate records of their employees. A portion of the contribution of the employees is
utilised  as premium to cover  term assurances  for a fixed sum and the balance is treated as
savings which are accumulated  at an
attractive rate. At present, the rate  is
10%  p.a, Member exit the scheme on
retirement or earlier by death or resignation. BENEFITS: (a) On death while in
service: Amount of insurance cover and accumulated  savings up to 
the date of death. (b)</div>
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 On retirement /
resignation: Accumulated  savings up to
the date of exit. TAX BENEFIT: (a) 
Contribution Full are treated as insurance premium and enjoy the
benefits under section 80C. (b)  Savings
accumulations received are tax free.</div>
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TYPES OF GROUP INSURANCE POLICIES

The LIC of India has designed some group insurance policies for the benefit of working class. Such policies are described briefl...

GROUP INSURANCE POLICIES

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Group insurance policies 
are certain plans of insurance which are offered to group of persons.
The group may be:<br />
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(a) Employer- employee 
group, (b) Association  of
professional, doctors, etc., ( C ) Members of Co-operative Banks / Credit societies. (d)  Association of weaker sections such as
Rickshaw pullers, Railway porters etc., (e) Member  of housing Societies.  (f) Borrowers of housing  loan from public sector undertakings.  (g) Borrowers of Bank  Co-operative Societies or housing societies.
Under group insurance a master policy  is
issued as evidence of contract between the insurance company and another legal
entity which may be an employer, trustee, and an association.<br />
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The master policy
defines the group of lives to be covered 
benefit if confers, the amount of contribution  to be paid and other condition and
privileges  of the participating  group member. Group insurance is a group
selection process and not a selection of individual life. It is recognised that
every group  will contain some proportion
of substandard lives but group under writing  assumes that
the insurer is able to reasonably  assess
the overall risk from the general nature 
of the group. The group  is
supposed to be homogeneous and contains 
sufficient  numbers so that the
number of claims to be  homogeneous and
contain  sufficient numbers so that the
number of  claims by death can be
reasonably  estimated on the basis of the
average. The amount of cover is determined on the basic of a formulas and is not
decided by individual  forming the group.
Insurance on the lives of all members up to a limit called ‘Free cover
limit’  is granted  on the basis of simple rules of  insurability ‘. ‘Simple rules of
insurability   means not absent from duty
on group of sickness  on the date of
effecting insurance. Free cover limit does not mean free insurance premium. It
is free to the extent that no evidence of health is called for .  As a result of ,ass
administration and simple underwriting 
practice, group insurance becomes 
a low cost insurance cover for a group. However the premium rates are
adjusted   on the basic of experiences.
This is called. Experiences Rating . For medium and big sized group. sharing of
profits on the basis of years after taking into amount feature. If surplus is
generated over a period of years after 
taking into account the premium collected and the benefit conferred the
rate of premium can be reduced in the future years. If on the other hand, it results in continuous  is rated up.<br />
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Difference between Group
Insurance and individual insurance  Group
insurance differs from individual 
insurance on the following counts.</div>

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 (1) Cover: A group of person  is covered under the Group insurance. A
person’s life covered in individual insurance. (2) Contract: The Group
insurance is contract between the insurer and another legal entity, which may
be an employer, trustee and an association. The individual insurance is a
contract between the insured and the insurer.</div>
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(3) Medical Examination : No medical examination is required
for Group insurance. In  Individual  insurance, medical examination is necessary
in most of the cases. (4) Policy: A master policy is issued   for Group insurance as against an individual
policy  in individual insurance. (5) Sum
Assured : A fixed sum assured is paid for every claim under Group insurance.
The sum assured depends  upon the premium
paying capacityof the assured in individual insurance.</div>
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  (6) Premium: The premium under the Group
insurance is paid by the employer or employee or by both. The premium under
individual insurance is paid either by the assured or by the insuring
party.  (7) Protection: The group
insurance  is a social welfare scheme.
The individual insurance is a provision 
for old age and for the family. 
(8). Change of Assured: The individual is changed under the Group
insurance in case of retirement or death. No such change is possible in
individual insurance.<br />
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GROUP INSURANCE POLICIES

Group insurance policies are certain plans of insurance which are offered to group of persons. The group may be: (a) Employer- empl...

ADVANTAGES OF LIFE INSURANCE

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The advantage of life
insurance over other types of savings instrument available  in the market are as follows<br />
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 1)  Creates an Estate: Life insurance policy
creates an estate. At any point of time the value of any other type of saving is the
total accumulation in that account only. If the savings holder unfortunately
dies, the amount  available  to the dependents  is the accumulation only. In case of the life
insurance the moment a policy  is taken
an estate in created to the extent of the sum assured under the policy i.e. if
the policy owner dies, what becomes payable to the dependents is the sum
assured   the total value of the state
and not the total premiums paid. </div>
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 2)
Encourages thrift:  Life insurance
encourages  thrift i.e., forced and
compulsory  savings. In case of  other types of savings. the moment persons
feels the need for money, there is great attraction to which money from the
savings accumulation. The purpose for which the savings accounts is opened is
seldom fulfilled for that reason. in Life insurance policies there is a
built-in discouragement  to withdraw.
Only surrender value which is  a
small  percent  of the premium. paid will be available to the
policy owner  if he wants be to withdrawn
. The policy owner thus is forced to continue 
payment of premiums and never try to surrender a policy. This will
ultimately  fulfill the purpose fore
which the policy was purchased. </div>
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3) Gift to near and
dear: Life insurance policies cannot be attached by any court of law or
income-tax authorities. A  married man
can take  a policy under married Women’s
Property Act for the benefit of his wife and / children separately and create
separate estates for their benefits. Once a policy  is obtained under his legislation  the policy 
holder will not have any hold or right over it. Life insurance thus can
be used as  a gift to the near and
dear.  </div>
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4) Protection against liquidation
of property: A Life insurance policy can be utilised <o:p></o:p></div>
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 as a collateral  security for a housing loan. In case of unfortunate
death of the policy owner, the amount available 
under the Life insurance policy is adjusted towards the outstanding  loan and interest and the house is released
to the beneficiaries  without any
encumbrance. Without such a facility the family will have to self sell the
house in the open market to clear the loan. It will be a distress sale and so
would fetch only a fraction of the real market value  of the house. Life insurance thus affords
protection against forced liquidation of property. </div>
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5)  Acts
as an Emergency fund: If immediate 
liquid cash is needed a policy of Life insurance can be against to the
Life insurance company, a Bank or any other financial institution as security
for a loan. <o:p></o:p></div>
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Life insurance thus
can acts as an Emergency Fund. banks today grant educational loans to students
for higher education. They insist on a Life insurance policy as a
collateral  security.  6) No stamp duty: Transfer of property contained
in a Life insurance policy does not attract any 
stamp duty like other property. It can be done by an assignment under sec. 38 of
Insurance  Act  1938, either by an endorsement on the back of
the policy  document or on a stamp
paper.  7)  No tax on proceeds of policy: The processed
of a Life insurance policy including  any
bonuses paid are not liable for income tax. </div>
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 8) Tax Exemption: For gaining income tax exemptions under Sec. 80C of
Income tax act, a person, can pay 
premiums under policies is the  on
his /her life or an the life is spouses 
or children, whether major of minor married or unmarried.</div>
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(9)  Simple claim settlement: Settlement of a
claim under Life insurance  policies  is very simple. In case of  a death claim, the nominee receives the
policy moneys. Incase  of survival of the
policy  holder till the date of maturity
of the policy, the maturity claim is paid 
to the policy holder himself. </div>
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<br /></div>
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<span id="goog_563812057"></span><span id="goog_563812058"></span><br /></div>
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10)  Safe method  of Investments : Life insurance  is a safe and profitable investments. The
IRDA constituted  by the Govt of
India  in 1998 keeps a constant  watch and vigil over the financial positions
of the Life insurance  companies. There
are strict solvency margins to be maintained by the companies. The IRDA pays
special attention  to the safety of the
moneys paid by the policy holders. thus life insurance  provides a safe method  for investments especially by the middle
class.  11) Effective management of
funds: One of the important  criteria for
investments of funds, apart from safety and liquidity is management of funds. A
life insurance  company  will have the necessary experience and
expertise in this field and a policy holder gets the benefits of the same
entirely free. Moreover the policy holder will be free of all tensions.  </div>
</div>

ADVANTAGES OF LIFE INSURANCE

The advantage of life insurance over other types of savings instrument available in the market are as follows 1) Creates an Est...

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