India Maharashtra Pune Group Insurance Schemes (punediary.com)

Group Insurance Schemes

LIC offers life insurance protection under group policies to various group such as employer-employee, professionals, co-operatives, weaker sections of society, etc. It also provide insurance coverage to people at subsidized rates under Social Security Group Schemes. Besides providing insurance coverage, the Corporation also offers group schemes to employers, which provide founding of gratuity and pension liabilities of the employers.

The main features of the schemes are low premium, simple insurability conditions such as employee not being assent from duty on grounds of ill health on the date of entry, and easy administration by way of issue of a single master policy covering all the employees/ members. Premiums are based upon age, combination of members, occupations and working conditions of the group. However, there are certain conditions as to minimum group size and the minimum participation to make the scheme viable. The standard offered by LIC are follows;

Group Term Insurance Schemes

Employer- Employee groups may be offered group insurance schemes providing uniform or graded cover.

Group insurance schemes providing uniform cover can be granted to Associations of professionals. (such as doctors, lawyers, chartered accountants , etc.) member of co-operative banks, welfare funds, credit societies and weaker sections of society.

Creditor - Debtor groups are also offered group insurance schemes covering outstanding loans. These groups are Members of primary housing societies where housing loans are granted by State apex housing societies, borrowers granted loans by Institutional agencies in Public / Joint Sectors for housing purpose and borrower members of co-operative / banks formed by employees of the same employers.

Group Insurance Scheme in lieu o EDLI

The Employees' Deposit Linked Insurance Scheme is applicable to all establishments and undertaking contributing to Employees' Provident Fund under the EPF and MP Act, 1952, with effect from 1.8.1976, unless exempted under Section 17 (2A) of the Act. The Scheme provides for an insurance cover to an employee, which is linked to his balance in the PF Account, subject to a maximum of Rs 62,000/-

The Act empowers the Central Provident Fund Commissioner to exempt an employer from EDLI if he opts for a Group Insurance Scheme of the LIC, which is more beneficial to the employees. Under LIC's Scheme, the insurance cover ranges from Rs. 5000/- to Rs. 62000/- depending upon the service put in by the employee and the current monthly salary on each Annual Renewal Date.

Group Gratuity Scheme

Gratuity is a statutory liability of most of the employers, which accrues to an employee for every year of service put in by him. As the liability accrues every year, from the point of view of sound accounting practice, it is desirable to provide for this liability before the profits are determined. The Group Gratuity Scheme provides a scientific method for funding gratuity liability as the premiums are based on actuarial principles.

The attractive feature of the scheme is the life insurance cover to every employee due to which, in the event of the premature death of the employee, his dependants become entitled to substantially higher benefits.

Group Superannuation Scheme

The Group Superannuation Scheme is designed to provide pension to employees on their retirement from service. A decreasing group insurance cover in conjunction with superannuating benefits may also provided under the scheme. The Scheme is of two types.

(a.) Money Purchase Scheme : The contributions are fixed generally as a percentage of the salary. The accumulated value of such contributions is utilized to purchase the pension.

(b.) Benefit Purchase Scheme : The amount of pension is fixed by the employer in advance generally in relation to the salary drawn by the employee at the time of exit. LIC determines the contribution payable for funding of pension benefits.

Different types of persions are available under LIC's scheme such as pension payable for life, guaranteed for 5, 10, 15 or 20 years and thereafter for life, Joint Life last survivor pension, pension payable for life with return of Purchase Price on death of the pensioner etc.

Group Saving Linked Insurance Scheme

The Group Saving Linked Insurance Scheme (GSLI) offers insurance cover together with a saving element. The contribution under this scheme is deducted from the monthly salary of the member. The scheme is allowed to select Employer- Employee group such as quasi-govt. bodies, Public Sector Corporations and reputable companies in public and private sectors who keep accurate records of their employees. Under the scheme, out of the contribution received in respect of each employee, a portion is utilized for the insurance cover and the balance known as contribution for savings, is accumulated till exit, at an reasonably attractive rate of interest. In case of death during service, the amount for which the member was covered at the time death is also paid along with the accumulated savings.

Voluntary Retirement Scheme (LIC's Plan)

The VRS benefits to employees generally provide for payment of an annuity (depending upon the salary nd length of service) which ceases at the normal retirement age. The LIC has evolved plans by which the VRS requirements of employers can be taken care of.

Group Leave Encashment Scheme

According to Accounting Standard (AS-15) of January, 1995 and amended Section 209 (3) of Companies Act, 1957, it has become necessary for employers to provide for the liability of leave encashment facility available to employee in the annual books of accounts.

The Group Leave Encashment Scheme (GLES) is designed to fund such liabilities of employers.

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