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CHAPTER 1........................................................................ 2
AN INTRODUCTION............................................................................... 2
ABOUT THE REPORT:............................................................................ 4
TITLE OF THE STUDY:........................................................................... 4
OBJECTIVES OF THE STUDY:................................................................4
LIMITATION OF THE STUDY:.................................................................4
DATA & METHODOLOGY:......................................................................4
CHAPTER:............................................................................................... 5
LAYOUT:.................................................................................................. 5
CHAPTER – 2.....................................................................6
LIFE INSURANCE CORPORATION OF INDIA........................................6
CHAPTER 3......................................................................10
THEORETICAL VIEW.........................................................10
CHAPTER 4......................................................................25
GROUP INSURANCE- A CASE STUDY.................................................25
CHAPTER 5......................................................................48


Insurance can be defined as the process of reimbursing
or protecting a person from contingent risk of losses through
financial means, in return for relatively small, regular payments
to the insuring body or insurance company.

Insurance involves pooling funds from many insured entities
(known as exposures) to pay for the losses that some may
incur. The insured entities are therefore protected from risk for
a fee, with the fee being dependent upon the frequency and
severity of the event occurring. In order to be insurable, the
risk insured against must meet certain characteristics in order
to be an insurable risk. Insurance is a commercial enterprise and a
major part of the financial services industry, but individual
entities can also self-insure through saving money for possible
future losses.

In the good olden days, the farming community used to live
almost self-sufficiently. In the hours of crisis the members
helped each other. When the family head temporarily stayed
back from farming operations owing to sickness, the other
members of the family automatically took care of him.
Industrialization has dramatically changed the way of life

around the world. There was rapid growth growth in new
industries and the existing industries looked to expand
domestically and internationally. Industrial revolution brought
opportunities as well as threats. The immediate advantages
were development of new tools and technological
advancements, innovations in production methods,
mechanization of activities, large scale operations, cost
reductions, cost efficiency, creation of colossal employment
opportunities, and evolution of new knowledge and emergence
of new professions. On the other hand, the concept of social
security in the form of joint family system was slowly getting
eroded. Self – dependence and self – sufficiency were lost
when people started migrating from farms to factories. The
concept of nuclear family took birth and people started feeling
socially and economically insecure. In the process every
member of the society was compelled to work to gain
economic independence.

Though, life insurance offers protection to the family in the
event of the unfortunate death of the life assured, it is also
true that majority of the population cannot afford to buy
sufficient insurance cover. That’s where, group insurance steps
in. Collection of people as a group, union, corporation or trade
association brings out the “power of members” to bargain for a
good price. Hence, group insurance extends insurance
coverage at an affordable price to many. Even employers get
encouraged to provide a welfare package through group
insurance schemes to their employees.



The present study is titled as – “A PROJECT REPORT ON GROUP
INSURANCE – A CASE STUDY”. The study is made with special


 To study the benefits of group insurance to customer.

 To study different schemes under group insurance.

 To know the group insurance schemes provided by Life
Insurance Corporation of India.

 To study the eligible groups for group insurance coverage.


The present study suffers from all limitations of case study


For the purpose of the present study, both primary and
secondary data were used. Primary data collected from
insurance company visit, interviewing staff etc. Secondary data
collected for books, internets, etc.

CHAPTER: LAYOUT: The present study is arranged as follows: Chapter 1: “AN INTRODUCTION” gives an introduction of title And the report. Chapter 3: Deals with Group Insurance – A Theoretical view. . Chapter 5: Summarizes the result of the study. Chapter 2: Gives profile of Life Insurance Corporation of India. Chapter 4: Group Insurance – A Case Study.

6% of the Indian Government's expenses.03 billion). History: The Oriental Life Insurance Company. at least 2048 branches located in different cities and towns of India along with satellite Offices attached to about some 50 Branches. Europeans in India were its primary target market. CHAPTER – 2 LIFE INSURANCE CORPORATION OF INDIA – A PROFILE The Life Insurance Corporation of India (LIC) is the largest state-owned life insurance company in India. and has a network of around 1. It also funds close to 24. was established in Calcutta in 1818 by Begin Behari Dasgupta and others. It is fully owned by the Government of India. and also the country's largest investor. It was founded in 1956 with the merger of more than 200 insurance companies and provident societies. Headquartered in Mumbai. and it charged Indians heftier premiums.31 trillion (US$202. the first corporate entity in India offering life insurance coverage. The Bombay Mutual Life . the Life Insurance Corporation of India currently has 8 zonal Offices and 101 divisional offices located in different parts of India. financial and commercial capital of India. It has assets estimated of 9.2 million agents for soliciting life insurance business from the public.

one of India's wealthiest businessmen. It witnessed. Nationalization: In 1955. The aggregate effect of these events led to a high rate of bankruptcies and liquidation of life insurance companies in India. In the ensuing investigations. The first half of the 20th century also saw a heightened struggle for India's independence. India's First War of Independence. This had adversely affected the faith of the general public in the utility of obtaining life cover. owner of the Times of India . adverse effects of the World War I and World War II on the economy of India. parliamentarian Amol Barate raised the matter of insurance fraud by owners of private insurance companies.Assurance Society. A bill was also introduced in the Legislative Assembly in 1944 to nationalize the insurance industry. The Indian Insurance Companies Act of 1928 authorized the government to obtain statistical information from companies operating in both life and non-life insurance areas. providing the first regulatory mechanisms in the Life Insurance industry. and in between them the period of worldwide economic crises triggered by the Great depression. The Life Insurance Act and the Provident Fund Act were passed in 1912. formed in 1870. The subsequent Insurance Act of 1938 brought stricter state control over an industry that had seen several financially unsound ventures fail. The first 150 years were marked mostly by turbulent economic conditions. Ram Kishan Dalmia. was the first native insurance provider.

which commanded a monopoly of soliciting and selling life insurance in India.” . Nationalization of the life insurance business in India was a result of the Industrial Policy Resolution of 1956.6 billion). created huge surpluses. Zindagi ke baad bhi" in Hindi. In English it means "with life also. including the life insurance. and contributed around 7 % of India's GDP in 2006. which started its business with around 300 offices. The slogan of LIC is "Zindagi ke saath bhi.6 million policies and a corpus of INR 459 million (US$ 92 million as per the 1959 exchange rate of roughly Rs. has grown to 25000 servicing around 180 million policies and a corpus of over 8 trillion (US$173. Current status: Over its existence of around 50 years. The recent Economic Times Brand Equity Survey rated LIC as the No. and the Life Insurance Corporation of India was created on 1956-09-01. 1 Service Brand of the Country. the Parliament of India passed the Life Insurance of India Act on 1956- 06-19. Life Insurance Corporation of India. The Corporation. by consolidating the life insurance business of 245 private life insurers and other entities offering life insurance services. which had created a policy framework for extending state control over at least seventeen sectors of the economy. after life also. Eventually. 5. 5 for a US $. was sent to prison for two years.newspaper.

" CHAPTER 3 THEORETICAL VIEW .Mission: "Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitive returns. and by rendering resources for economic development." Vision: "A trans-nationally competitive financial conglomerate of significance to societies and Pride of India.

Low cost and liberal underwriting norms unlike those followed in the individual insurance led to phenomenal growth of the group insurance. Hence. with gradual realization of importance of group insurance. Major developments were observed only after independence. different types of group insurance policies based on combination of benefits decided for employee by the employer and state emerged. Majority of the factories employed huge machineries.Industrial Revolution became major source for spreading earlier the concept of group insurance. those individuals who were denied individual insurance could get insurance protection on group basis. while some benefits were payable on survival. Some of the benefits were payable on untimely death. and demands by trade unions. term assurance and pure endowment. while it took a late start in India. Group insurance has almost become an indispensable .. and working with them more often led to accidents resulting in injuries. and deaths. the Group Life Insurance and Group Superannuation Schemes can be combined in a multiple number of ways to form new schemes in order to meet growing demands.e. This need for providing variety of benefits on a cost effective scale gave a boost to group insurance. Hence. Similar to the two basic plans in the Life Insurance i. However. a need for social protection was felt by individuals who suffered from the occupational hazards and accidents. disablements. the group insurance market was not amenable to this kind of benefit to employees. The concept of group insurance emerged and flourished in the western and developed countries. a sudden rise in business was noticed. though in the initial years. With the passage of time.

It offers an element of certainty to employees by comforting the people affecting by ill health. 3. group insurance is helping organizations by providing insurance facilities at lower cost. Group insurance offers insurance coverage to unlimited number of employees under the same contract. Group insurance under the same umbrella provides various products of life. 2. where the employees are not able to purchase the individual insurance policy. Because of different insurance products. unemployment and even premature death. accident and health insurance.part of the employee benefit package. retain employees and their high productivity. In the world of increasing cost of living.. Employers are nowadays more concerned with high productivity and morale of the employees. 4. group insurance has become quite handy to the employers in offering healthcare coverage as employee benefits at a lower cost. . it has been a blessing for both the employers and the employees. etc. disability. IMPORTANCE OF GROUP INSURANCE: Group insurance has changed the picture of the whole insurance industry. this makes it accessible to all types of organizations. 5. at an affordable price. Thus. Group insurance has indeed made great contribution to the society as could be seen from the following: 1. which would ultimately help employers. Providing insurance facilitates to the small enterprises.

Tax Deductions: . it depends solely on the employer to fund its insurance policy. This aspect of group insurance has made it popular among different groups like trade associations. etc. Thus. Low Cost: The major benefit derived by the employee under group insurance is the low cost of policy as compared to the individual insurance policy. A large section of the working class is found to be unable to obtain an individual insurance policy for oneself/one’s spouse/family because of its high cost. Employee Benefit Plan: Group insurance is the most popular employee benefit plan in the foreign countries. which has increased the scope of employee benefits manifold.Benefits to the Employees: Employees have been the major gainers of group insurance. Flexibility: The concept of group insurance is applicable to all the sections of society and industry. This is feasible due to large number of employees under the same insurance policy that ultimately reduced the administrative costs.

Public Image: An organization can always promote its public image through group insurance schemes and thus. but also their productivity and morale. Tax Benefits: . Benefits to the Employers: Group insurance has become an essential employee benefit. and has helped employers in not only improving the productivity of the employees but also employee morale in the organization.The employee under the group can avail the benefits of tax deductions by contributing to the group insurance policy. Retention: Many organizations provide group insurance to their employees in the form of an additional benefit to retain them for a longer period. Group insurance benefit not only increases the retention ratio among the employees. attract the major productive cream of the market.

.By providing the group insurance benefit plan. whether contributory or non-contributory. the employer can avail tax deductions under the taxation rules. to the employees.

organizations prefer to take the non-contributory policy by paying fully by themselves or both the employer and the employee sharing the cost as in the case of a contributory policy. Determination of benefits: The insurance company has to decide the method of determining the benefits in a way that individual selection both by the employer and the employee does not generate conflicts. FEATURES OF GROUP INSURANCE: Master Contract: In group insurance. under a “master policy or a contract” for the whole group. Premium Payment: On the basis of premium payment. irrespective of size and number of employees. TYPES OF GROUP INSURANCE PLANS: . To obtain the benefits of high productivity. belonging to a homogeneous unit are insured collectively. In both the cases the employer gets the benefits of tax deduction to the extent of his contribution towards the premium. contributory and non-contributory. Thus.Size of Organization: Group insurance is beneficial to all types of organizations. the employer needs to determine a formula or a specific level of salary or position that forms the basis for determination of benefits. The master contract is issued to the employer. group insurance is divided into two categories. large number of employees. while the employees receive “certificate of insurance”.

the insurance amount is paid on total and permanent disability or death of the member caused purely due to accident. Here. Group Supplemental Life Plans: The Supplemental Life Plans or optional life plans offer additional insurance benefits beyond the basic benefits provided under the group term life plans.Several kinds of group plans are being offered by the insurance companies but the following are the more common kind of plans available in India and abroad: Group Term Life Insurance: Group life insurance schemes aims at providing insurance coverage to employees. On . and a declaration of good health from the members is considered sufficient. which provides coverage against accident risk to the member. The premiums under these plans are usually dependent on age of the employee with brackets of five years. Group Accident Insurance: The Group Accident Insurance plan is a modified version of the basic term assurance plan. The scheme may be contributory or non-contributory depending on the employment conditions. the proportion of premium shared by employee is deducted from the salary of concerned and together with contribution of employer is paid to the insurance company. These plans are usually renewable annually. Medical coverage is also provided though members need not undergo a medical check- up. In case of contributory scheme. The premiums are usually shared by employer and employee.

. non-occupational and twenty four hour basis. regular income for the period of unemployment is provided. The coverage is usually extended full time i. In most cases the premium is fully borne by the employer..e.temporary disability.

Group Disability Income Insurance: Group Disability Income plans intend to provide periodical income during the loss of income caused due to disability like. which lend huge money and the credit risk assumed by them. The member under the policy is usually the creditor who takes loans from the lender. accident or sickness. An employer has got option on the creation of a trust. which offers death benefit that is equal to the outstanding debt amount of the member. These plans help a member to meet his/her basic financial needs caused due to unfortunate event. Group Gratuity Scheme: According to the provisions of the Act.Group Credit Life Insurance: The Group Credit Life Insurance plan is a modified version of the Group Term Life Insurance plan. to either manage it privately or enter into an agreement with an insurance company for its management. Here. These plans are most popular in the banks. and the premium is borne by lender on non-sharing basis. Determining the amount of disability stands as a challenge for the insurance company. an employer creates a trust. The trustees . and the trustees enter into a group gratuity scheme with a life insurance company. every employer needs to pay gratuity on retirement or death of an employee at a rate of 15 day’s salary for every completed year of service rendered. The group disability plans are issued on short-term and long-term basis. The lender can take a group credit life insurance plan on the lives of his debtors.

and on such delegation. investment and periodical valuations of the fund. Employers need to pay the contributions in the form of premiums to the insurance company. the life insurance company. A well designed and managed group superannuation plan can provide a considerable amount to an employee. these schemes were introduced much later. Insurance companies also offer death benefit under the schemes. An advantage of the scheme is that employer/trustees need not bother about investment of funds and actuarial valuation. The insurance company pays the leave encashment amounts as and when an employee retires. while in western countries they were available from the beginning of this century. without the employer prone to much complications and hardships. Group Leave Encashment Scheme: A Group Leave Encashment Scheme provides employers a method to fund the leave encashment liability of their employees. insurance company takes care of the administration. Group Superannuation Scheme: The superannuation schemes were developed with an intention to provide post-retirement income to the employees. This is mainly non-contributory scheme. . In India.delegate the management of the trust.

It is not permissible to issue any unmanned group policy. Such coverage could be had either for disabilities due to accidents alone or accidents and illness. which are offered by public and private insurance companies. Only one policy is issued for the entire group. Group Health Insurance: A couple of health insurance schemes are available in India. SOCIAL SECURITY: Social security has emerged as a sequel to the society from agricultural to industrial that changed the very social fabric as the people who migrated to the big cities found themselves to be financially insecure as they could find very few people around to share their uncertainties/emotional needs with. Group Mediclaim Scheme: The group mediclaim scheme is available to any group/association/institution/corporate body of more than 50 persons. owing to any occupational or non- occupational injury. provided it has a central administration point. illness or accident.Group Disability Scheme: Disability is defined as the inability of the insured employee to perform the duties of his job. This . accident or sickness. Disability insurance provides security in the form of stated amount of periodic income against loss of income owing to an insured’s inability to work due to a disability.

To start with. In the Indian scenario. provided to managers / executives etc.change occurred first in Europe during the 19th century. sickness. the term “employee benefits” came into existence. including government-mandated benefits and perks. accident. increased working hours and disparities in wealth between the upper and the lower class of people in the society. However. the government is the major player in the field of social security measures. the “employee benefits” were mostly confined to all that an employee would be requiring in situations like death. the private employers and insurance companies are forging ahead in the field of social security or social insurance in the form of various employee benefit packages. as time advanced the term “employee benefits” expanded its coverage. many governments came up with the concept of “Social Security”. etc. . employers too have realized that it is their interest to protect and provide different kinds of benefits besides wages to their employees. rural insurance and benefits for the social sector. other than direct wages and cash bonuses. Although industrial revolution brought with it increased material benefits. Thus. Apart from the government. EMPLOYEE BENEFIT SCHEMES: Over a period of time. Social security is mainly in the form of government initiated employer benefits. it also led to unsuitable living conditions. In a broad sense. retirement and unemployment. it includes everything that an employer made available/provided to the employees. To arrest the ill effects of such disparities..

on his/her unfortunate death while in service. . This Act was later renamed as Miscellaneous Provision Act. Both employer and employee contribute towards provident fund account of employee. An employee can be part of one of the following schemes:  Employees provident fund scheme. This act was amended by introducing benefits for the dependents of the employee. For those not covered by the EPF Act.The prominent form of employee retirement benefits such as:  Provident Fund  Employees Deposit-Linked Insurance Scheme  Gratuity  Employees’ Pension Scheme PROVIDENT FUND Provident fund is a lump sum amount accumulated over a period of service of employee. and is paid on retirement/death/resignation of the employee. with the minimum amount of contribution fixed by the government.  Public provident fund. This Act included the Employees Family Pension Scheme of the year 1971 and later on the Employees Deposit Linked Insurance Scheme in the year 1976. It is a defined contribution scheme. the contributions to the provident fund and other retirement benefits were voluntary.  Recognized provident fund.  Employees Provident Fund Scheme The Employees Provident Fund Act was passed with the objective of providing adequate financial support to the employees on their retirement.  Provident fund schemes of government employees.

receive benefits from the Contributory Provident Fund (CPF). Early withdrawals and advance against available balance. 1. from the General Provident Fund(GPF). employers also contribute at a rate of 10% of salary of employees. 3. subject to certain limits is allowed. The minimum rate of contribution in the GPF account is 6% while they can contribute an amount higher of this if desired. 2. The savings are. Migration from India with the intention of permanent settlement abroad. allowed to accumulate with interest so that a lump sum is available to the employee at the time of retirement. Apart from employee’s contribution in case of CPF. usually receive monetary benefits. while those who are not eligible for pension as per service conditions. 2. Recognized Provident Fund: Every employer who employs more than twenty people statutorily obliged to set-up a provident fund. thus. Termination of services.BENEFITS: 1. Provident Fund Schemes of Government Employees: The employees of the central government undertakings who are entitled to pension as per service conditions. Retirement due to permanent and total incapacity for work on account of physical or mental disability. . On retirement from service after reaching 55 years of age. A provident fund is in the nature of a savings plan in which the employers and the employees contribute a fixed sum as a percentage of their monthly earnings.

the Employees Deposit Linked Insurance Scheme was introduced in the year 1976. If this happens in the early part of his employment. Public Provident Fund: The Public Provident Fund was instituted under the Public Provident Fund Act. these accumulations take time to become sizeable amounts. A need was felt to provide financial help to the members of the family on the unfortunate death of the employee. 3. A PPF account can be opened at any Nationalized Bank or Post Office. It is a defined contributory scheme with individual accounting system. He can also open an additional account on behalf of a minor of whom he is the guardian. the EDLIS is believed to be the most well performing scheme. . A PPF Account can be opened by an individual on his own name. The PPF scheme is a financial instrument for workers in the unorganized sector to ensure old age income security through adequate accumulated savings. the payment of contribution will cease and only accumulated balance standing to his credit at that point of time will become payable to his family. if the employee dies while in service. the amount outstanding in the account will be meager to fulfill needs of family of deceased. Meantime. Among all the schemes of EPFO. Hence. EMPLOYEES DEPOSIT LINKED INSURANCE SCHEME: Though in the Employees Provident Fund Scheme monthly contributions of the employees and employer to accumulate with interest. 1968.

The foremost purpose of the Act is to provide a minimum amount to the workers depending on the number of years of service rendered by them to their employer. it was optional to join the scheme.GRATUITY BENEFIT: The Payment of Gratuity Act is one of the legislations passed by the Indian government for providing old age income security for both organized and unorganized sector working population. a lump sum is paid to the employees/workers on their leaving the services due to retirement. 1971. FPS was mandatory for all employees who joined service on or after 1st march.16% of the wages towards the scheme. resignation. Neither employer not the employees needed to make separate contributions towards the scheme. under the Employees Provident Fund and Miscellaneous Provisions Act.. Being a defined benefit . Government also contributed an amount of 1. EMPLOYEES PENSION SCHEME: The Employees’ Pension Scheme was introduced in 1995 as an important constituent for old age income benefit of employees. instead from the existing contribution an amount equal to 2. The earlier Family Pension Scheme was substituted by the Employees’ Pension Scheme in 1995.33% of the wages were made to the scheme. and for employees who joined prior to 1st march 1971.e. disability or death. Gratuity i. EPS is essentially a defined benefit scheme. Neither employer not the employees needed to make to the scheme.

This scheme is ideal for employers. CHAPTER 4 GROUP INSURANCE. . associations.A CASE STUDY Group Term Insurance Sche mes Group Insurance Group Critical Illne Scheme in Lieu ss Rider of EDLI Group Mortgage Group Gratuity Redemption Group Scheme Assurance Schemes Scheme Group Super Group Leave En Annuation Group Savings cashment Schem Scheme Linked e Insurance Scheme Group Insurance Scheme is life insurance protection to groups of people.scheme the pension payable is dependent on the final salary of the member and the number of years of service rendered.

Administration of the scheme is on group basis and cost is low.societies etc. Under Group (Term) Insurance Scheme.2 Group Term Insurance Schemes: Nature of the Scheme: Group Insurance Scheme is meant to provide life insurance protection to groups of people. Following are the different types of group schemes:- DIAGRAM NO: 4. life insurance cover is allowed to all the members of a group subject to some simple insurability conditions without insisting upon any medical evidence. Scheme offers covers .1 Different types of Social Security Scheme are as follows:- Social Security Schemes JanaShree Bima Shiksha Sahayog Aam Admi Bima Yojana Yojana Yojana DIAGRAM NO: 4. and allows you to enjoy group benefits at really low costs.

or some other benefits (e. General Features of various Group Insurance Schemes: PREMIUM: The premium under such scheme may be wholly paid by the employer or the Nodal Agency. payment of double the sum assured on death due to accident (without permanent disability . DOUBLE ACCIDENT BENEFIT: Double Accident Benefit. The Scheme may provide for a uniform cover to all members of the group or graded covers for different categories of members. the members may also contribute.only on death and there is no maturity value at the end of the term. the scheme may be contributory i. Premium Chargeable: Group (Term) Insurance Scheme is at present offered under One Year Renewable Group term assurance plan (OYRGTA). i. However. Every year on Annual Renewal date LIC charges the premium depending upon the changes in size and age distribution of the age group. life cover to supplement pension or PF benefits in case of death). cover for all amounts of outstanding housing loans or vehicle advances. Critical Illness Benefit. Different Schemes: Group (term) Insurance Scheme has a number of varieties.e. The schemes may have add-ons like Double Accident Benefit. Disability benefit etc..g.e.

may be allowed under Group Insurance Schemes for an extra premium. . ELIGIBILITY: For Group Insurance Scheme in lieu of EDLIS the insurability condition is that should be a member of the Provident Fund Scheme of the employer. For all non-employer-employee Group Schemes the basic insurability condition is that the member should be in good health on the date of entry. For other GI Schemes of employer- employee groups the insurability condition is that the member should not be absent on ground of sickness on the entry date.benefit).

C. Alternatively every employee/ worker can be covered for a uniform sum assured which will be decided depending upon the group size. particularly when the salary level is high and average age of the group is low. 00.P.000 to 2. Group Insurance Scheme in Lieu Of EDLI: ADVANTAGES TO THE EMPLOYER: The premium payable by the employer is usually less than the total contribution being paid by the employer to R.ADMINISTRATION OF THE SCHEME: At the commencement and thereafter on each Annual Renewal Date.F. Settlement of claim is quicker.000 depending upon the current salary and service put in from day one irrespective of the actual balance in the Provident Fund. . the Group Policyholder will have to send all the member's data (and particulars of the new entrants from time to time) to the P & GS unit of LIC. ADVANTAGES TO THE EMPLOYEE: Each employee is covered for a sum assured ranging between 5. Premium paid by the employer is treated as normal business expenses for Income-Tax purpose. LIC requires only the death certificate and the Claim Form from the employer. Detailed OYRGTA premium calculation will be made on each Annual Renewal Date.

Group gratuity scheme: Life Insurance Corporation of India offers its Group Gratuity Cash Accumulation scheme to enable employers to meet their gratuity liability in a very simple and efficient manner. Apart from increase in service. increase in salary also contributes to increase in liability substantially as the benefits are payable on .ACCIDENT BENEFIT: Double accident benefit can be allowed to the extent of the Sum Assured for an extra Premium. The gratuity arrangement with LIC provides the following services to the company: Fund management under interest accumulation system Claim settlement on exit as per company rules/gratuity act Built in Insurance arrangement for the employees for future service MIS related to Income Tax and trusts accounts and Actuarial valuation Fund management: Critical issues Safety: Liability on account of gratuity experiences sharp increase every year due to its nature of its computation. The scheme is formulated in compliance with Part C of the IV schedule of Income Tax Act and tax benefits are available as provided in Income Tax rules.

Hence. Yield: LIC has been offering very competitive and consistent interest rates over the years.last drawn salary.00% . hence no reinvestment issues and no time lags. The unique advantage with LIC is the contributions made by the company and interests credited by LIC are irreversible. LIC has offered 9. For the year 2009-10.65% depending on fund size. This ensures highest level of safety for the total corpus and consistency in future contributions.9. Hence funds have to be invested in a conservative way with a consistent growth and insulated from market risks. No responsibility on trustees on Investment decisions: . Interest rate offered by LIC is on daily balancing method. gives a greater comfort to employer. As the gratuity payments are statutory and LIC gratuity scheme being the only investment tool which enjoys sovereign guarantee. hence effective rate of interest is much higher. Liquidity: A fund available with LIC is a single account for investment and claim settlement. there is no idle time for earning interest. Another significant aspect is interest gets compounded annually. The interest declared is net of administrative expenses incurred. hence no separate charges are charged after crediting the interest. Hence 100% liquidity is ensured for the purpose of claim settlement.

Advantage of ‘real outsourcing’ can be derived by associating with LIC. Trustees are free from all investment risks and hassles in cash accumulation system. .

LIC provides this information to the trustees and recommends the level of contributions. but no charges at entry level for any number of payments. No charges on withdrawals for resignation or retirement or death. trust may prefer a claim from LIC by sending a claim form. Total corpus comprising of money contributed by the company and interest credited by LIC is available for claim settlement up to 100% subject to availability of funds. Claim settlement: On the exit of an employee due to retirement / death/ resignation. Funding can also be in a staggered pattern during the year. Actuarial recommendations: On annual basis. Claim amount will be made available to trustees. Trustees can have the following options: Preferring a claim from LIC and paying to employee Paying the money to employees and seek reimbursement Paying claims to employees at their end and seeking annual reimbursement .No hidden charges: The scheme is focused on a long term association in compliance with investment regulations and statutory payment obligations and no charges are levied on the transactions for which the fund is meant for.

The Group Insurance premium will be commensurate to the cover provided. The insurance cover can be flexible depending on the requirements of the Trust. Income Tax Benefit on Insurance Premium: The insurance premium paid towards the above said benefits is treated as deductible business expenses to the company. the scheme also provides for employee welfare measures with built in insurance cover. Besides the above said advantages. Insurance cover for future service gratuity: Another salient feature of the Gratuity Scheme with LIC is that it provides for insurance coverage to the employees to the tune of future service gratuity subject to certain limits.MIS: LIC provides statement of receipts and payments and actuarial valuation certificate and certificate of balance for the trust account. The premium is not treated as perks in the hands of the employees Group Super Annuation Scheme: .

 The problem of liquidity gets automatically eliminated as soon as the fund is managed by LIC. the corpus (contributions plus interest) is utilized to provide the pension as per his choice.  Superannuation Scheme Provided by LIC: The employer contributes a certain fixed percentage of salary of each member.  Group Insurance in conjunction with the Group Superannuation Scheme can be taken by an Organization to provide for an attractive lump sum payment on the unfortunate death of a member while in service. ON DEATH: The Pension is payable on the life of the beneficiary.  The Administration of the fund is carried out by us in a scientific manner and claims are promptly settled.Advantages of LIC managed Mutual Funds:  The LIC managed Pension fund has the following added and distinct advantages:-  An attractive and competitive yield on the fund will be credited to Fund A/c. ON RETIREMENT: On Retirement of a member. Such Contributions are accumulated by LIC and the accumulated amount is utilized to provide various benefits as mentioned below. at very nominal cost. Corpus is utilized towards the payment of pension of the type the beneficiary may opt and the benefit so received is tax free.  We conduct free actuarial valuations of the funds administered by us from time to time. BENEFITS: 1. A . 2.

PENSION OPTIONS PROVIDED BY LIC: Life Pension ceasing at death.ON WITHDRAWAL: He can get the equitable interest transferred to the Superannuation Scheme of the new employer or opt for immediate or deferred pension. ELIGIBILITY CONDITION: It is not obligatory or statutory on the part of the employer to provide for pension to all employees. 15 or 20 years and life thereafter. 10. if the employer has taken Group Insurance Scheme in conjunction with the Group Superannuation Scheme. Joint Life Pension payable on the last survivor of the employee and spouse. The eligibility conditions may be defined . 3. Joint Life Pension payable to the last survivor of the employee and spouse with return of capital on the death of the last survivor. 1/3rd of the pension can be commuted at vesting. Life Pension with Return of Capital and Group Pension Terminal Bonus on death. It is entirely up to him to decide to which class/ classes of employees he desires to extend the scheme.lump sum payable by way of death besides the pension. Life Pension guaranteed for 5. If desired.

employer cannot discriminate between the employees and thus extends the scheme uniformly). (However. .on the basis of designation or salary. after the categories are specified.

WHO PAYS CONTRIBUTION? Mostly the employer contributes. Attractive returns on savings to meet post retirement needs. the membership of the Scheme is compulsory. For the new entrants to the Company. Group Savings Linked Insurance Scheme : OBJECTIVES OF THE SCHEME: Protection at low cost without individual evidence of health.) The annual contributions are treated as deductible business expenses. but is so desired. INTRODUCTION OF THE SCHEME: The Scheme can be introduced by employers provided certain percentage of employees is willing to join the Scheme.CONTRIBUTION: The maximum annual contribution that an employer can make to the Pension Fund and Provident Fund is restricted by the Income Tax Provisions to 27% of the annual salary (basic plus D.A. Premium has two components i. Simple procedures for granting life cover to large groups under one umbrella.e. PREMIUM: It is decided on the basis of Group size and the occupation of the group. Risk Premium and . both the employer and the employees may contribute. in which case the scheme is called a Contributory Pension Fund Scheme.

The premium paid by the employer towards insurance cover is treated as business expenses. . ACCIDENT BENEFIT: Double accident benefit can be allowed to the extent of the Sum Assured for an extra Premium. Risk Premium is utilized to offer life cover and the Savings Premium is accumulated in members account. All future employees have to join the scheme compulsorily. All employees who have not crossed the retirement age are eligible to join the scheme. The only insurability condition is that the employee should not be absent on medical ground on the date of commencement of the scheme. 80C of the Income Tax Act. TAX BENEFITS: Employees' total contribution. ELIGIBILITY TO JOIN THE SCHEME: Any employee irrespective of his present state of health is eligible to join the scheme subject to certain conditions.Savings Premium. The entire claim amount including interest earned payable on retirement or leaving service or on death is free from income-tax. INTEREST ON SAVINGS: The present rate of interest allowed on saving portion of premium is 8% compounding yearly. savings as well as risk premium is entitled for income-tax rebate under Sec.

Group Leave Encashment Scheme: Funding of leave encashment: End-of-the-year leave encashment facility available to employees can be a huge liability to the company. if provided for. . Just pay a yearly premium. LIC has introduced Group Leave Encashment Scheme. To meet this need of entrepreneurs and businesses. So can be Medical Leave Encashment. fund your leave encashment liability and let LIC take care of your worries.

Interest at the rate declared by LIC from time to time will be credited to the Running Account at the end of the financial year. The company will contribute as per the advice of LIC. .The Features: Group Leave Encashment Schemes (GLES) of LIC helps the employers in funding of their lave encashment liability. The salient features of the scheme are as follows:- The Company will submit the employees' data and rules for Leave Encashment. LIC will make actuarial valuation and find out the funding requirements which shall be quoted to the company. A small term insurance premium will be charged in addition to contributions for funding. A uniform life cover per employee or graded cover will be provided under One Year Renewable Group Term Assurance Plan of LIC. A Running Account will be maintained under the scheme and the contributions (excluding term assurance premium) will be credited to this account and all claims except term assurance cover will be settled out of the Running Account.

 Rate of interest with which the loan was availed. his/her family will be entitled to the amount of Insurance Cover. Group Mortgage Redemption Assurance Scheme : ‘Group Mortgage Redemption Assurance Scheme’. Insurance cover every year will be almost equal to the loan outstanding at the anniversary date of each borrower. On the death of an employee. which will be tax-free. the premium depends upon:  Age (nearer Birthday) at entry of the member into the Scheme.Benefits: On the exit of an employee or encashment of leaves during the service the Leave Encashment amount will be paid from the Fund of the scheme maintained with LIC. . Under the scheme. The amount of Term Insurance Premium paid for Life Insurance Cover will be treated as business expenses.  Term of loan. in addition to his / her leave encashment benefit. is a Group Insurance Scheme for the borrowers of Housing/Vehicle Loans from Financial Institutions where Loan is recovered under EMI. the premium is payable in a single installment covering a decreasing life cover. Under the Scheme.  Outstanding loan amount at entry date. The Life Insurance Corporation of India will do the Actuarial Valuation and will provide necessary certificate as per AS-15.  Schedule of repayment.

The Group Critical Illness rider allowable for each member shall be a minimum of 20 % of sum assured under the base plan and . OYRGTA (One year renewal group term assurance) type schemes. Group Leave Encashment and Group insurance in conjunction with Superannuation. Schemes along with which the rider can be given shall include Group insurance.Any borrower may become member of this scheme. Existing Borrowers can join the scheme with certain conditions within 6 months of the commencement of scheme. The claim proceeds are used to square off the outstanding loan. The minimum term of assurance is 3 years. In case of death of the member during the coverage period. Group Critical Illness Rider : Critical Illness product (accelerated benefit) is basically offered as an optional Rider benefit to all Employer-Employee group policyholders (both existing and new schemes) along with Group term insurance schemes i. Group Gratuity (CA). FEATURES: The Group critical illness rider benefit to employees is given as an add on benefit to the Group policy which has an element of life cover. life cover on the anniversary date proceeding the date of death is payable. The relevant premium is to be paid by the Group Policyholder. The Benefit will not be extended to spouses or dependents.e. Only full time permanent employees who are actively at work will be eligible for Critical Illness cover.

50 Thousands and maximum of Rs 20 lac per member.shall not exceed 100% of the sum assured under the base plan subject to minimum of Rs. .

The diseases covered under the rider (subject to certain exclusions) are: Cancer  Coronary Artery (Bye pass) Surgery  Heart attack (Myocardial infarction) Stroke  Kidney failure (End stage renal disease)  Aorta (Surgery of Aorta)  Heart valve replacement  Major Burns. The Group Critical illness (Accelerated) Benefit pays a lump sum amount as a percentage of Sum assured out of the Sum assured under the life cover in the event of occurrence of 8 diseases covered under the rider.All members of the attached policy should participate at inception and all eligible new members should compulsorily participate. This period of 90 days shall be called “Waiting period”. No Critical Illness Benefit shall become payable to a member if the disease occurs within 90 days of the start of the coverage for that member of the scheme. BENEFITS: The Critical Illness Accelerated benefit is payable upon the first incidence of any of the 8 specified diseases and evidenced as per the diagnostic criteria specified. . The rider shall terminate on payment of the Critical Illness benefit.

to any Critical Illness for which care. arising out of. Diseases that have previously occurred in the life of the member of the scheme i. the difference between the base sum assured and the critical illness benefit already paid is payable on death. . the scheme on which the rider is opted for) benefits as under shall become payable: A benefit equal to base sum assured if no critical illness benefit is payable or has been paid earlier. or howsoever. during the waiting period). the benefit is reduced by the amount of critical illness benefit payable or already paid.e.e. or advice was recommended by or received from a Physician. EXCLUSIONS: Diseases in the presence of an HIV infection. regardless of whether the earlier incidence occurred before the individual was covered or whether the insured was covered by us or another insurer. or which first manifested itself or was contracted before the start of the policy period.e. based on. Any disease occurring within 90 days of the start of the coverage for each member of the scheme.In case of death nothing is payable under this rider. under the base plan (i.. However. In other words. or for which claim has or could have been made under any earlier policy. No payment will be made for any claim directly or indirectly caused by. the benefit is payable only if the disease is a first incidence . (I. If critical illness benefit is payable or already paid. treatment.

Participation by the member of the scheme in any flying activity. including but not limited to . hunting. Any congenital condition. diving or riding or any kind of race. fare-paying passenger of a recognized airline on regular routes and on a scheduled timetable. Failure to seek or follow medical advice. mountaineering. bungee-jumping. Participation by the member of the scheme in a criminal or unlawful act. invasion. hostilities(whether war be declared or not). civil war . parachuting .armed or unarmed truce. Alcohol or solvent abuse or taking of drugs. revolution. Taking part in any naval. insurrection. military or usurped power. rebellion. riot or civil commotion. War. strikes. narcotics or psychotropic substances unless taken in accordance with the lawful directions and prescription of a registered medical practitioner. Engaging or taking part in professional sport(s) or any hazardous pursuits. except as a bona fide. act of foreign enemy. military or air force operation during peace time. underwater activities involving the use of breathing apparatus or not.mutiny. .

Existing diseases are not covered. Intentional self-inflicted injury. suicide or attempted suicide. the radioactive. explosive or hazardous nature of nuclear fuel materials or property contaminated by nuclear fuel materials or accident arising from such nature. while sane or insane. .Nuclear contamination.

If a student fails and is detained in the same standard. 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.12.  ELIGIBILITY: A person who is aged between 18 and 59 years.  NODAL AGENCY: A State Government Department which is concerned with the welfare of any such vocation/occupation group. 2.NGO.Self-Help Grouped. Village Panchayat.  ELIGIBILITY: Students studying in ix to xii standards.  MINIMUM MEMBERSHIP SIZE: Twenty five. a Welfare Fund/ Society.SOCIAL SECURITY SCHEMES: 1.  BENEFIT: . Below or marginally above poverty line a member of any of the approved vocation/occupation groups. whose parents are covered under Janashree Bima Yojana.2001 for the benefit of children of members of Janashree Bima Yojana. he will not be eligible for scholarship for the next year in the same standard. Shiksha Sahayog Yojana : This is a scholarship scheme launched on 31.

per quarter per child will be paid for maximum period of 4 years. The applications duly filled up and certified will be sent along with the list of the beneficiary students by the Nodal Agency to the concerned LIC. it is difficult to face life with a smile. The scholarship/s will be disbursed to the beneficiary students through the concerned Nodal Agency. And it becomes even more difficult when the future of your family is uncertain. The scheme will be administered through Pension and Group Schemes Department of LIC of India. As only a limited number of beneficiaries will be provided scholarship under the scheme. HOW TO CLAIM SCHOLARSHIP: The Nodal Agency will identify the students. The benefit is restricted to two children per member (family) only.Scholarship of Rs 300/. Aam Admi Bima Yojana : In a rural landless household. . when everyday living is a struggle. The member of Janashree Bima Yojana whose child is eligible for scholarship has to fill up an application form (available with Nodal Agency) and submit to the Nodal Agency. P&GS Unit for disbursement of scholarship/s. the selection for eligible students will be made on the basis of poorest of the poor.  PREMIUM: No premium is charged for the scholarship.

. a prestigious scheme of the Central and State / Union Territory Governments and administered by LIC brings a ray of hope and smile to these households.AAM ADMI BIMA YOJANA.

ELIGIBILITY: The member should be aged between 18 and 59 years.NODAL AGENCY: The Nodal Agency shall mean the State / Union Territory Government appointed to administer the scheme. AGE PROOF:  Ration Card  Extract from Birth Certificate  Extract from School Certificate.  Voters list  Identity Card  In case of doubt. . The member should be the head of the family or one earning member in the family of rural landless household. a certificate from Primary Health Centre can  Be accepted as authentic proof of age. The Nodal Agency shall act for and on behalf of the insured members in all matters relating to the Scheme. IDENTIFICATION OF BENEFICIARIES: The State / Union Territory Government in consultation with the Panchayats will identify the persons to be covered under the scheme. All the members will be provided with an identity card by LIC with an unique identity number.

Employee benefit schemes provide adequate financial security in two events namely premature death and excess longevity. Happy and secured employees work better. employees and governments. the major developments were observed only after Independence. which in turn reduces the employer’s tension. Industrialization has drastically changed the Socio-economic aspects of human life around the world. The present form of Group Insurance originated in the United Stated of America in the early 19th century. Welfare legislations and employee benefits to a great extent have attempted to address these issues. While it took a late start in India. Group Insurance has become an indispensable part of the employee benefit package which provides financial benefit at a very low cost. Social and economic insecurity has become the main cause of concern for individual. . Group Insurance is an insurance which covers a group of people (like employees of a common employer or professionals in a common group). Social Security. CHAPTER 5 CONCLUSION Key to a successful business is keeping the employees motivated. The concept of Group Insurance emerged and flourished in the western and developed countries.