Group Schemes

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Salient Features of Group Schemes LIC offers life insurance protection under group policies to various groups such as employer-employee, professionals, co-operatives, weaker sections of society etc. It also provides insurance coverage to people under certain approved occupations at subsidised rates under Social Security Group Schemes. Besides providing insurance coverage, the Corporation also offers group schemes to employers which provide funding 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 absent 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 schemes offered by LIC are as follows : Group Term Insurance Schemes : Employer-employee groups may be offered group insurance schemes providing uniform or graded cover. These groups may also be offered schemes covering outstanding housing loans and outstanding vehicle advances granted by the employer to its employees. Group insurance schemes providing uniform cover can be granted to Associations of professionals (such as doctors, lawyers, chartered accountants etc.), members of cooperative 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 purposes and borrower members of cooperative societies/banks formed by employees of the same employers. Group Insurance Scheme in lieu of EDLI : Employees Deposit Linked Insurance scheme is applicable to all establishments and undertakings contributing 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 linked to his balance in the PF Account subject to a maximum of Rs.60,000/-. 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.5,000 to Rs.62,000 depending upon the service put in by the employee and the current monthly salary on each Annual Renewal Date. The employer can also opt for a uniform cover of Rs.62,000/-. The premiums depend on the average age, occupation of members and the size of the group. The LIC's scheme has the advantage of low premium in many cases and the prompt settlement of claims. 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 an employee, his dependants become entitled to substantially higher benefits. The funding of the Gratuity benefits can also be made on Cash Accumulation basis, whereunder the fund is accumulated at an attractive rate of interest. The rate of interest allowed during 2001-2002 varied from 9.25% to 10.5% depending on the size of the fund. Attractive tax advantages are available to the employer and the employees. Group Superannuation Scheme : The Group Superannuation Scheme is designed to provide pension to the employees on their retirement from service. The scheme may be financed by the employer alone or jointly with the employees. A decreasing group insurance cover in conjunction with superannuation benefits may also be provided under the scheme. The Scheme is of two types a) Money Purchase Scheme :The contributions are fixed generally as percentage of salary. The accumulated value of such contributions is utilised to purchase the pension of appropriate amount. 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 contributions payable for funding of pension benefits Different types of pension 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 Savings Linked Insurance Scheme : The Group Savings Linked Insurance Scheme (GSLI) offers insurance cover together with a savings element. The contribution under this scheme is deducted from the monthly salary of the member. The scheme is govt. bodies, Public Sector Corporations and reputed 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 utilised for the insurance cover and the balance, known as contribution for savings, is accumulated till exit at an attractive rate of interest, For policies where policy-anniversary falls after 1.1.2000 the current rate is 10% p.a . The amount apportioned from the monthly contributions towards insurance premium will be determined on the basis of the nature of the group, occupation, age composition of members etc. The savings contribution is returned with interest at the time of retirement, or exit by any other mode. In case of death during service the amount for which the member was covered at the time of death is also paid along with accumulated savings. Group Leave Encashment Scheme : According to the Accounting Standard(AS-15) of January, 1995 and amended section 209 (3) of the Companies Act, 1957, it has become necessary for employers to provide for the liability of Leave Encashment facility available to employees in annual books of accounts. The Group Leave Encashment Scheme (GLES) is designed to fund these liabilities of employers. A Group Insurance cover of a flat orgraded sum assured has also been provided to employees. The scheme shall be administered by the employer. The funding is done on the lines of Gratuity Funding under Cash Accumulation Plan. The rate of interest allowed is the same as under Cash Accumulation Plans. SOCIAL SECURITY SCHEMES JANASHREE BIMA YOJANA (JBY): The objective of the scheme is to provide life insurance protection to the rural and urban poor persons below poverty line and marginally above the poverty line. ELIGIBILITY A person who is *Aged between 18 and 59 years. *Below or marginally above poverty line *A member of any of the approved vocation/occupation groups NODAL AGENCY: A State Government Department which is concerned with the welfare of any such vocation/occupation group, a Welfare Fund/ Society, Village Panchayat,NGO,Self-Help Group,etc. MINIMUM MEMBERSHIP SIZE: Twenty five BENEFITS In the events of *Death (other than by accident) of the member,an amount of Rs.20,000/- is payable. *death/total permanent disability, due to accident,an amount of Rs.50,000/-is payable. *Permanent partial disability, due to accident, an amount of Rs.25,000/- is payable. PREMIUM *The premium under the scheme is Rs.200/-per annum per member. *50% of the premium i.e. Rs.100/- will be contributed by the member and/or Nodal Agency/State Government. *Balance 50% will be brone by the Sociall Security Fund. APPROVED VOCATION & OCCUPATIONAL GROUPS: A) The group that can be covered are like workers in - (i) Foodstuffs like khandsari (ii) Textile (iii) Manufacture of wood products (iv) Manufacture of paper products (v) Manufacture of leather products (vi) Printing (vii) Rubber and coal products (viii) Chemical products like candle manufacture (ix) Mineral products like earthern toys manufacture (x) Fire cracker's workers (xi)Construction workers (xii)Other related cottage industries to be identified by Nodal Agencies and other groups as identified by the Nodal Agency and approved by LIC. B) The occupational groups are : Beedi workers, Brick Kiln Workers(Jalandhar),Carpenters, Cobblers, Fisherman, Hamals, Handicraft Artisans, Handloom Weavers, Handloom and Khadi Weavers, Lady Tailors, Leather and Tannery Workers, Papad Workers attached to 'SEWA', Physically Handicapped self- Employed Persons, Primary Milk Producers, Rickshaw Pullers/ Auto Drivers, Safai Karmacharis, Salt Growers, Tendu Leaf Collectors, Scheme for the Urban Poor, Forest Workers, Sericulture, Toddy Tappers, Powerloom Workers, Scheme for Women in Remote Rural Hilly Areas.