The Life Insurance Corporation of India comes with a lot of schemes that prove to be beneficial to the employees of organisations. This time, it is the LIC New Group Leave Encashment Plan, which basically provides the extension of leave encashment to the employees of a company. Besides that, it also gives life cover for employees who either resign from the company or in terms of death or retirement.
To get the benefits of this scheme, the employer needs to attain a minimum age of 18 years and a maximum of 75 years. Also, the employee is required to deposit a minimum of Rs 10,000 and pay the Risk Cover Premium. Also, the minimum sum insured is Rs 1,000 and there is no limit to the maximum contribution.
Furthermore, the maximum maturity age of an employee should be 80 years. This scheme can be renewed within 1 year of the premium date. However, this comes under tax benefits.
The benefits of the scheme include:
- Sum assured and
- Leave Encashment Benefit as per the scheme rules.
- Benefits payable on retirement / leaving service before Retirement: The Leave Encashment Benefits shall be payable as specified in the scheme rules.
The charges involved in the scheme include:
1.Mortality charges: This is the amount required to provide life cover benefits to the group members as per scheme rules. These charges – total for all the members included in the policy – will be deducted from the policy account value every month, in advance.
2.Policy Administration Charges: LIC charges Rs. 0.15 per Rs. 1,000 of the total life cover benefit under the policy as Policy Administration Charge annually which is deducted from the policy account every month in advance.
3.Fund Management Charge (FMC): FMC is deducted from the policy account value at the end of each quarter or at the time of exit which depends on the size of the policy account value of the scheme.
4.Market Value Adjustment (MVA): MVA will be applied at the time of bulk exits and complete surrender of the policy, and will be deducted from the policy account value. It is applicable on withdrawal amounts that are more than 25% of the policy account value. It depends on the market value derived from the revaluation of assets at the time of exit or surrender.
5. Surrender Charges: A surrender charge of 0.05% of the policy account value shall be deducted if a consumer surrenders the policy within 3 years from the date of commencement. The maximum surrender value applicable is Rs. 5,00,000. If the policy is surrendered after 3 policy years, there will be no surrender charge.
6.Service Tax Charge: Service tax will be charged on the policy as applicable.
7.Revision of charges: LIC is well within its rights to change the Fund Management Charges and Policy Administration Charges any time of the year, after getting approval from IRDA. The maximum FMC permissible is 1% annually, and the maximum PAC chargeable is Rs. 0.30 per Rs. 1,000 per annum at the rate of Rs. 500 per member..