As an employer, your employees are your most important asset. You would want to make sure that you attract the best talent to your organization and retain your employees in today’s fast-paced work environment. In order to achieve this, it is important to offer your employees the benefits that show your appreciation for their loyalty and commitment. Group Insurance Plans is a unique employee retention tools that fulfill the protection and saving needs of employees of the organisation. These plans help offer financial security to the employees and their loved ones. The members covered under the single insurance policy are collectively referred to as a ‘Group’ and these can be extended to two set of groups-

  1. Formal Groups (Employer-Employee) - These groups include members of professional organizations, companies, etc. Here, the employer buys the insurance plan that covers the members of the organization.
  2. Informal Groups (Non-employer - Employee) - These groups include holders of the same credit card, members of the same cultural or social organization, etc. Here, the group administrator buys the insurance plan that covers the members of the organization.

Group Term Plan

If you are a working employee, you can avail a group term insurance plan offered by your employer and ensure that the future of your loved ones is safe and secure as they will receive a death benefit in case something happens to you.

Group term life insurance policy refers to the insurance coverage that is provided to a group of people. Group-term life insurance schemes offer financial independence to the concerned employee's family in the event of death. It is intended to provide a monetary guarantee to the beneficiary of the covered under the group term life insurance plan in the case of death of the insured.

Group-term life insurance schemes have become a fundamental constituent in benefit packages presented to employees by employers. In fact, most fraternal providers offer group term life insurance to their members. 

Life insurance is an essential product for persons who have financial dependents.

Who is Eligible for Group Term Life Insurance Policies?

Group-term life insurance policies are offered to the following sections of people:

  • Employer-employee groups
  • Non-employer-employee groups
  • Banks
  • Professional groups
  • Non-banking financial institutions
  • Microfinance institutions

What is The Nature of a Group Term Life Insurance Policy?

The following is the nature of a group life insurance plan:

  • It is awarded to all members of a certain group contingent on certain basic conditions of insurability
  • Medical reports need not be produced
  • Maturity value is not provided
  • Scheme covers death

General Features of Various Group Insurance Schemes

Premium: Premium on group term insurance can be paid entirely by the employer.

  • Members under the scheme are also allowed to make contributions towards the premium of the scheme.

Double Accident benefits:- For an extra premium, a double accident benefit is provided to the insured in the event of an accident.

  • This comes excluding the permanent disability benefit.

How does a Group Life Insurance Plan Work?

Following is the flowchart group life insurance plan-

  • A group administrator is issued a master policy upon which he pays an initial premium.
  • This initial payment covers all the members of the group for a tenure of one year.
  • An option to choose the sum assured is provided to the members of the group.
  • This sum can either be a lump sum amount or could be linked to a salary account or a loan account, etc.
  • Once the policyholder has paid the premium, the members are covered for a tenure of one year from the date of commencement of the policy.
  • The group life insurance plans are annually renewable.
  • The premium is charged based on the alterations in the size and age allocation of the concerned age group.

What Are the Benefits of a Group Term Insurance Plan to Employees?

The following are the benefits of a group term insurance plan to employees-

  • Employees are assured of financial assistance being extended to their families in the unfortunate event of their demise, critical illness, etc.
  • Employees can benefit from the inconvenience of medical tests be done away with until their free cover limits.
  • The premiums paid by their employers are not treated as perquisites.
  • Employees can enjoy death benefits that are exempt from tax under Section 10(10D)
  • Easy administration by way of simple documentation
  • Can be customised to meet niche needs of the employees enrolled
  • Offers security to the family of the insured
  • Safeguards the insured's financial interest


  • Group Life Claim Process: In case of the untimely demise of the employee, the nominee or beneficiary can file a claim to get the sum assured through the following steps: Inform the insurance company within 24 hours or as early as possible Submit the necessary documents like original death certificate, insurance copy, medical documents supporting the reason of death, etc. to the insurance company Once these documents are submitted, the insurance company would assess the details and accordingly settle the claim, if approved.
  • Time Taken to Settle Claims: On receiving the required documents for making claims, the Insured will connect with insurance Company that will evaluate the documents. Once they are satisfied with the claim, they will transfer the amount to the beneficiary through the organisation within 7-10 days from the date of receipt of the documents.
  • Renewal Process: Group life insurance plans can be renewed after a year of the commencement of the policy. The corporation gets 3 months to revive the policy from the date of the first unpaid premium. If the policyholder wants to add or remove any member from the policy, the company can do it at the time of renewal.

Major Exclusions

  • Any treatment within the first 30 days of cover except for any accidental injury.
  • Any Pre-existing diseases/conditions diseases like cataracts, hernia, hysterectomies, joint replacement, etc. will be covered as per the specified period of the policy.
  • Expenses arising from HIV or AIDS and related diseases.
  • Abuse of intoxicant or hallucinogenic substances like drugs and alcohol Hospitalisation due to war or an act of war or due to nuclear, chemical, or biological weapons and radiation of any kind.
  • Non-allopathic treatment, congenital external diseases, mental disorders, cosmetic surgery, or weight control treatments.

Group Gratuity Plan

This is a Statutory benefit to the employees for their services to the Employer and is governed by the Gratuity Act, 1972 (Amended 2010). This Act stipulates payment of the Gratuity as a statutory benefit to such employees who have to pay Gratuity benefits better than the statutory requirements may as well be offered. As per revised accounting standards, the Gratuity liability is to be estimated by actuarial valuation every year and to be provided in the books if account of the Company. Gratuity liability increases with increase in salary and services of the employee every year. Thus a prudent employer should create a Gratuity Fund instead of making provisions in books of account. Developing such fund with Insurer should help the company in creating an asset to meet the Gratuity liabilities of the company in most tax efficient manner.

Gratuity is a statutory benefit to be provided to an employee as per the Payment of Gratuity Act, 1972. It is a lump sum amount paid out to an employee, upon his exit from employment and fulfilling the criteria prescribed in the gratuity Act. These statutory payments to employees create a gratuity liability for you as an employer. As an employer, one of your paramount concerns will be availability of sufficient funds to meet your company’s obligation for these gratuity payments.

While Gratuity is a statutory obligation it is also a very important tool today to create employee loyalty. A comprehensive gratuity plan can help organizations reduce both business costs and corporate tax. Insurer manages your gratuity liability effectively and also helps you release resources for other business activities. Gratuity is not just a statutory obligation but also a very important tool today to retain and attract talented employees. However, gratuity liability of the employer tends to increase with an increase in the salary and tenure of employment. A comprehensive and effective gratuity plan will help you in reducing business costs and meet the funding needs to make gratuity payments. It will also help you avail tax benefits as applicable to approved gratuity funds.


Employees’ Gratuity trust needs to be set up as per provisions of Income Tax Act – we provide necessary assistance and guidance in this process.

  • Insurer maintains the fund under the name of the trust.
  • Investment of funds is taken care by Insurer and interest is declared as per the performance of the total fund and credited ti the individual trust fund.
  • At the time of exit of an employee, trustees send discharge and advise insurer to make payment of Gratuity as per scheme to the trust.
  • The insurance scheme of insurer provides future service gratuity in case of unfortunate death of the member at a very reasonable cost.
  • Unit linked & Endowment linked returns and long-term investment growth.
  • Regular Additions for higher fund sizes.
  • Choice of Funds
  • 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.
  • Life insurance coverage for employees advantages


  • Employer-Employee groups
  • Minimum Group size: 10 employees
  • Plan options: Unit linked & Endowment
  • Entry age Min: 18 years (Last birthday)
  • Entry age Max: As per scheme rules, subject to maximum of 79 years (Last birthday)
  • Maximum Maturity age (Last birthday) As per scheme rules, subject to maximum of 80 years
  • Policy Term : 1 year (Yearly renewable)
  • Sum Assured : Min: 1,000
  • Sum Assured : Max: As defined in the scheme rule
  • Gratuity Contribution Min: 2,00,000 at inception
  • Gratuity Contribution Max: No limit
  • Premium paying term: Yearly/ Half yearly/ Quarterly/ Monthly
  • Scheme administration: Monthly addition and deletion of members

Tax Benefits


The premium is not treated as perks in the hands of the employees Under section 10(10) of the Income Tax Act.

  1. For Government employees: Gratuity received is tax free
  2. Employees not covered under Gratuity Act: Tax free upto lower of Rs.20 Lakhs Half months average Salary * No. of completed year of services
  3. For Employees covered under Gratuity Act: Tax free upto lower of Rs.20 Lakhs

15/26 * last drawn salary * no. of years of completed service or part thereof in excess of 6 months

What are the benefits of funding group gratuity?

Scheme setup assistance – Insurer shall assist in customizing solutions specific to your needs and adhering to the gratuity act.

Assistance in liability estimation – Insurer shall assist in providing an estimate of your gratuity liability

Manage your investments – Insurer offers a complete and competitive range of investment options keeping your needs in mind. The two investment plans are available

Unit linked funds are market linked investments which help you to get good returns and empower you as an employer to decide the asset allocation best suiting their needs.

Whereas the Endowment fund aims at offering a steady appreciation of your investments also guaranteeing the capital invested by you.

Dedicated service team – Insurance Companies understands that service is of utmost importance to maintain a long term sustainable relationship. and hence we have a dedicated group service team which appoints a relationship manager who would be dedicated to service your requirements.

Claim Settlement:

Insurance Companies undertake to settle claims and payouts within specified turnaround time.

Required Documents:

  • Age of Employee
  • Date of Birth of employee
  • Date of Joining.
  • Salary + DA. Age of retirement.

Gratuity Claim

  • (A) A person eligible for gratuity shall give in writing to the employer
  • (B) The employer shall determine the amount of gratuity and give a notice in writing to employee to receive the gratuity when due.
  • (C) The employer shall the make the Gratuity payment within 30 days to due.
  • (D) Amount is not paid during the specified time by the employer, he shall pay a simple interest for the delayed time at rate as the government,
  • (E) any dispute regarding amount of gratuity or the person receiving Gratuity shall be paid the Controlling Authority.
  • (F) any aggrieved party can make an appeal to the appropriate government within 60 days from receipt of orders

Payment of Gratuity

If he completed 5 yearyears of continuous services (A) Superannuation (B) Resignation (C) Retirement (D) On this death or disablement to accident or disease shall not necessary where the termination of the employment of any employee is due to death or disablement. Provided further in case of death of the employee Gratuity payable to him shall be paid to his nominee or nomination has been made to heirs is minor. The share off such minor shall be deposited with the Controlling Authority who shall invest the same for the benefit other financial institution as may be prescribed attains majority.

Group Superannuation Plan

What Is the Superannuation Scheme?

Superannuation, in simple terms, is a retirement benefit plan offered by the employer to his employees. Further, it is also known as the company pension plan, as it is the retirement plan devised by the company for the benefit of its employees. Companies can apply under Superannuation schemes provided by approved insurance companies. Every year, it has to contribute a certain amount to the group scheme on behalf of its employees. An employee, on retirement, can withdraw a certain amount from this as his pension.

Types of Superannuation Schemes:

Defined Benefit Plan

In this type of superannuation plan, the benefits one gains on retiring depends entirely on their rank, age of retirement, service period, and final salary. On retiring, the employee receives a predetermined amount as a pension at fixed intervals. Additionally, the defined contribution plan is more complex, and the risk involved in this plan lies entirely on the employer.

Defined Contribution

Plan In the case of defined contribution plans, an employee may also make a voluntary additional contribution to the fund. Most companies prefer this plan over the defined benefit plan because of the ease of management. Further, the risks involved in this plan lies entirely on the employee as they wouldn’t know the exact amount they would receive after retirement. Additionally, the benefits the employee would receive depends on his contribution to the superannuation plan and the market forces at the time of his retirement


  • Benefits are also influenced by market forces in effect at the time of benefit distribution.
  • Easy management is a benefit of defined contribution plans. The only problem is that the employee is taking the risk because they don’t know how much they’ll get when they retire.
  • Fixed-benefit arrangements No matter how much is contributed, the benefit in this type of superannuation is already fixed.
  • The employee benefit is fixed and predetermined. The number of years an employee has worked for the company, the age at which they began receiving benefits, their salary, and other factors are the foundations upon which predetermined benefits are based.
  • This kind of plan is fairly complex, and the employer bears the risk of it.
  • A fixed sum that is regularly determined is given to the eligible employee upon retirement.

Working of Superannuation

The superannuation fund of the employees receives a guaranteed contribution from the employer. On behalf of the employer, this fund is managed by the company trust or by any authorized insurance provider. The employer contributes a set percentage of the employee’s basic salary and dearness allowance to the superannuation fund for a specific group of employees.

In actuality, the employer makes this contribution, making it a part of the company’s costs (CTC). However, in the case of defined contribution plans, an employee may also make a voluntary additional contribution to the fund.

How is the Superannuation Benefit Calculated?

Superannuation calculation can be complicated. An employee must be associated with the company for a minimum of three years to avail maximum benefits.

  • Less than a year : NIL
  • One to two years : 50% of contribution + interest
  • Two to three years : 75% of contribution  + interest
  • More than three years : 100% of contribution + interest

How do you claim?

Withdrawal of superannuation fund can happen in a few instances like

  1. Death of the employee. In this case, either nominee or family members would make the withdrawal claim of superannuation fund.
  2. Withdrawal possible when an employee changes the job. It is irrespective whether the new employer is providing superannuation benefit or not.
  3. Withdrawal on the retirement of the employee.
  4. Transfer superannuation fund benefit amount to NPS (Tier-1) in case employee resignation (this is movement and not withdrawal).

There are two options available for employee.

  1. Employee is allowed for commutation i.e. lump sum withdrawal.
  2. Employee is allowed to get annuity pension payment.

I) Superannuation withdrawal rules for commutation (Lumpsum withdrawal)

  1. Lump sum withdrawal up to 33% of a superannuation fund, if employee is eligible to receive a gratuity. The employee would be eligible for gratuity only if he works for 5+  years in the same company.
  2. Lump sum withdrawal up to 50% of a superannuation fund, if employee is NOT eligible to receive a gratuity. Employee would NOT be eligible for gratuity if he has moved out of the company within 5 years.

II) Superannuation withdrawal rules for Annuity Pension Payment

Once an employee chooses commutation option, the balance would be considered for annuity pension payment. One can consider any options for this annuity among few available pension scheme. These scheme details look more or less like annuity pension schemes offered by insurance companies. The details may slightly vary between the insurance companies, hence one need to check before opting them.

Group EDLI Plan

EDLI – Employees Deposit Linked Insurance Scheme

Uncertainties of life in the modern world have made getting adequate insurance cover imperative for every individual. This is especially important for private-sector employees who do not enjoy the same social security benefits as public sector employees. To extend the benefits of life insurance to private sector employees, the government has introduced the Employees Deposit Linked Insurance Scheme (EDLI) in 1976.

Features of Employees Deposit Linked Insurance Scheme

Here are the essential elements of EDLI, applied uniformly to all beneficiaries under the policy:

  • EDLI applies to all employees with a basic salary under Rs. 15,000/- per month. If the basic salary goes above Rs. 15,000 per month, the maximum benefit is capped at Rs. 6,00,000/-. With effect from 28.04.2021, the EPFO has increased the maximum benefit to Rs.7 lakh.
  • There is no need for the employees to contribute to EDLI. Their contribution is required only for EPF.
  • A bonus of Rs. 1,50,000/- is available under the EDLI. With effect from 28.04.2021, the bonus is increased to Rs.2.5 lakh.
  • The Ministry had increased the minimum amount of benefit to Rs.2.5 lakh in Feb 2018, which was valid for two years. The EPFO has extended this minimum amount of Rs.2.5 lakh with retrospective effect from 15th Feb 2020.
  • Any organisation that has more than 20 employees needs to register for EPF. Therefore, any employee who has an EPF account automatically becomes eligible for the EDLI scheme.
  • There are no exceptions to the insurance coverage provided by EDLI. It protects the insured person round the clock, all around the world.
  • An employer can opt for another group insurance scheme, but the benefits offered must be equal to or more than those offered under EDLI.
  • As per the provisions of the EDLI, the contribution of an employer must be 0.5% of the basic salary or a maximum of Rs. 75 per employee per month. If there is no other group insurance scheme, the maximum contribution is capped at Rs. 15,000/- per month.
  • For all calculations under EDLI, the dearness allowance must be added to the basic salary. 

Calculation of EDLI Charge

The registered nominee will receive a lump-sum payout in the event of the death of the insured person. If no nominee or beneficiary is registered, then the amount would be paid to the legal heir. With effect from 28.04.2021, the pay-out to be awarded will be calculated as under:

{Average Monthly Salary of the Employee for the last 12 months (capped at Rs.15,000/- p.m.) x 30 } + Bonus Amount (Rs.2,50,000/-) 

Documents required for a payout under EDLI

To process the claim under EDLI, the following documents are to be submitted by the claimant: –

  • Duly completed Form 5 IF.
  • Death Certificate of the insured person.
  • Succession Certificate in case the legal heir files the claim.
  • Guardianship Certificate if the claim is filed on behalf of a minor by a person other than the natural guardian.
  • Copy of cancelled cheque for the account in which the payment is to be received.

How to claim the benefits under EDLI

The process to be followed by the nominee or claimant to receive the amount under EDLI is as follows:

The benefits can be claimed by the nominee specified by the insured person. If no nominee was registered, then the family members or legal heirs can apply for the same. The deceased person should have been an active contributor to the EPF scheme at the time of his/her death. EDLI Form 5 IF has to be duly completed and submitted by the claimant. The claim form has to be signed and certified by the employer. If there is no employer or the signature of the employer cannot be obtained, the form must be attested by any of the following: 

  • Bank manager (in whose branch the account was maintained)
  • Local MP or MLA
  • Gazetted Officer
  • Magistrate
  • Member/Chairman/Secretary of Local Municipal Board
  • Post Master or Sub-Postmaster
  • Member of the regional committee of EPF or CBT. 

The claimant must submit all the documents along with the completed form to the regional EPF Commissioner’s Office for processing of the claim. The claimant can also submit Form 20 (for EPF withdrawal claim) as well as Form 10C/D to claim all the benefits under the three schemes, EPF, EPS, and EDLI).

Any additional documents required must be furnished at the earliest to process the claim.

Once all the documents are provided and the claim is accepted, the EPF commissioner must settle the claim within 30 days from the receipt of the claim. Otherwise, the claimant is entitled to interest @12% p.a. Till the date of actual disbursal.

Contribution by the Employee and Employer to the EPS, EPF, and EDLI

The employer makes the contribution to these schemes on behalf of the employees. The employee contribution is deducted from the salary before they credit the salary. Employees themselves need not make any direct payment to these schemes.

The contribution of employees is calculated as: –

  • For EPF – 12%
  • For EPS – None
  • For EDLI – None

The contribution of employees is calculated as: – 

  • For EPF – 12% For EPS – None
  • For EDLI – None The contribution of Employer is calculated as: –
  • For EPF – 3.67% For EPS –8.33% or Rs. 1,250/- For EDLI – 0.50 or max Rs. 75/-

The chief motive of the EDLI scheme is to offer financial security to the family members of the policyholder (deceased person). Family members mean spouses, unmarried daughters, or male children up to 25 years of age. The employee cannot choose which of the three schemes, EPF, EPS, or EDLI, he/she wants to opt for, but they are transferable with any change in the job. The new employer will continue to make payments in the existing account only.

Group Leave Encashment Plan

New Group Leave Encashment Plan by the Life Insurance Corporation of India (LIC) is a variable insurance product for companies and business owners who employ a workforce. The plan meets the liability for providing leave encashment to employees and also offers life cover to recompense the employer for the death of an employee. The policy has to be taken in the name of the employer or the trustees of a company.

Eligibility Criteria for Group Leave Encashment Plan

To be able to secure a group leave encashment plan, the employer has to meet the following criteria:

  • Minimum age: 18 years
  • Maximum age: 75 years
  • Maximum age at renewal: 80 years
  • Minimum group size for the existing scheme: No limit
  •                                                                                    : 10
  • Maximum group size: No limit

Features of Group Leave Encashment Plan

Group Leave Encashment Plan comes with some attractive features. Here's a list for easy reference:

  • Plan Type: Non-linked, non-participating, fund-based variable insurance plan
  • Policy Account: Single account for all employees coming under the group scheme
  • Policyholder: Employer/trustees
  • Policy/Premium Payment Term: Annual, renewable
  • Minimum Contribution: The total amount required to provide Leave Encashment Benefit as per AS-15 (Revised), a minimum of Rs. 10,000 at the time of inception of the policy, total mortality charges and other applicable charges per year.
  • Maximum Contribution: No limit.
  • Minimum Sum Assured: Rs. 1,000
  • Cooling-off Period: In case of objection the policyholder can return the Master Policy within 15 days
  • Loan on Policy: Not available
  • Bulk Exits: If the amount to be paid on total exits (a member leaving the group) is more than 25% of the total scheme fund at the beginning of the year, it will be considered as a bulk exit. If the withdrawal amount is more than 25% of the total policy account value at the beginning of the policy year, it will be marked as a bulk exit.
  • Surrender Value: You can surrender the policy by giving advance notice of 3 months. Guaranteed Surrender Value will be available on surrender, only on leave encashment and not on the life cover. However, the LIC may pay a Special Surrender Value if you are okay with it.

Benefits of Group Leave Encashment Plan

By enrolling Group Leave Encashment Plan, the employers can avail of the following benefits:

  • Interest Rates: The policy comes with a Minimum Floor Rate (MFR) of 0.50% per annum. MFR is a guaranteed interest rate that can be earned during the policy term. The Insurance company declares a non-zero-positive Additional Interest Rate for the policy accounts every financial quarter. After the fifth year of the policy, the corporation may also declare a non-zero-positive Residual Addition for the policy account at the end of each policy year. The residual addition is dependent on the gross investment yield of the policy account, its actual yield, and the yield referred to in the maximum reduction in yield in that duration (as prescribed by IRDA).
  • Policy Cover: If a group member dies while in service, the employer gets the sum assured as well as the leave encashment benefit. If the group member retires or resigns from work, the employer gets the leave encashment benefits.
  • Guaranteed Surrender Value (GSV): GSV would be equal to 90% of the total contributions paid (net of Mortality Charges and Policy Administration Charges deducted until the time of surrender) except the benefits paid since the policy commenced. Special
  • Surrender Value (SSV): SSV is equal to the policy account value on the day of surrender, after the deduction of the applicable surrender charges and Market Value Adjustment.