The success of an organization is synonymous to its employee’s satisfaction. An employee is a valuable asset of the company, and so IDBI have come up the IDBI Federal Retiresurance Group Insurance Plan. This insurance is specially designed for employers who wish to fund their employees’ retirement schemes. The plan aids in the management of the funds that are set aside for the employees’ retirement period like superannuation, Gratuity and leave encashment to ensure equal benefits for your employees’ hard work.
Principle and Key Features
The principle of IDBI Federal Retiresurance Group Insurance Plan is to provide a insurance plan for employers to manage their employees’ retirement allowance – gratuity, leave encashment, and superannuation, efficiently. Following are the key features of the plan:
- The IDBI Federal Retiresurance Group Insurance is a renewable plan. The plan can be renewed after every one year.
- The plan can be availed only by the group of employer and employee with a minimum 10 number of members in a group.
- The insurance company issues a master policy covering the members of the group with a pre-determined sum. The employer of the organization holds this master policy.
- Defined benefit and contributions scheme is covered under the plan.
- The gratuity and leave encashment is looked under the defined benefit scheme, and the superannuation is looked under the defined contribution scheme.
How Does This Insurance Plan Work?
- You need to make annual contributions on particular dates.
- The initial contributions can be done altogether at the beginning of the scheme or paid in installments.
- Under the defined benefit, for each scheme, a policy account is maintained. The contributions received and the accrued interests are managed in the policy account. When any member exists the policy, the deserved money is to be provided, and in case of insufficiency of funds, the employer is responsible for filling up the remaining amount and pay the money to the employee.
- Under the defined contribution, separate accounts are maintained for each member of the group. The contributions received and accrued interest are managed in the policy account. When any member exists the scheme, the accumulated money is to be paid to that employee.
- In the event of the death of any insured member of the group, a death benefit is payable to the insured.
- You have the option to choose the duration to pay the premiums known as PPT (Premium Payment Term).
- In the case of surrendering the policy, the accrued sum after the deduction of surrender charges and market value is reimbursed.
Policy Details, Benefits and Eligibility
| Entry Age | Maturity Age | Group Size | Death Benefit | Policy Term | Contribution | Frequency of Contribution | |||
| Min: 18 years | Max: 79 years | Max:
80 years |
Min: 10 | Max: No limits | Gratuity and Leave Encashment
· Accumulated liability as per the scheme with a fixed sum assured (Rs. 1000) Superannuation · Defined Benefit: Accumulated liability as per the scheme · Defined Contribution: Accumulated balance in the account and min. the assured benefit of 100.1% for all premiums paid
|
NA (Policy is renewable every year) | Initial
Min: Rs. 50,000 Max: No limits
|
Annual
Min: Nil Max: No limits |
Monthly / Quarterly / Bi-annually / Annually |
Benefits
- Assured minimum floor rate of 0.5% per annum is credited to the policy account on a quarterly basis throughout the policy term.
- Quarterly, a non-negative additional interest rate is credited to the policy account.
- From the 5th policy year, non-negative residual additions are credited to the policy account.
- Under the defined contribution scheme, in case a member is deceased, the balance in his/her account along with a 100.1% of all the premiums is paid.
- Under the defined benefits scheme, in case a member is deceased, the accumulated liability is paid.
- Under the gratuity and leave encashment scheme, the accumulated liability is paid along with a fixed certain sum equal to Rs. 1000.
Why Retiresurance Group Insurance Plan?
- The IDBI Federal Retiresurance Group Insurance Plan aids you in managing funds for your employee’s retirement benefits with the schemes mentioned below:
- Defined Benefit (DB): Under this scheme, the benefits are pre-determined as per the rules of the scheme. The contribution done towards the fund considers both the contribution for the past service of your employees as well as the future service liabilities for both the current and the future employees. The contribution would be determined according to the valuation by the insurer.
- Gratuity: Under this benefit, you need to pay your employee a lump sum amount in gratitude for the services offered by the employee to the company.
- Superannuation: According to this benefit, you can efficiently plan for your employee’s retirement along with tax benefits.
- Leave encashment: With this benefit, the employer have to pay a lump sum amount to your employee for the number of leaves that he/she accumulated over a period leaving the company.
- Defined Contribution (DC): In this scheme, the contribution is fixed as per the scheme rules in respect of each member. Also, the members can make contributions along with the master policyholder.
- Superannuation: This benefit helps you to plan your employee’s retirement along with tax benefits.
- Death benefit: This plan provides a basic life cover to your employees which is payable to the employees’ families in case of their untimely demise. The benefit that is payable is as follows:
- Superannuation:
- Under Defined Contribution scheme, accrued account balance with a minimum benefit of 100.1% of all premiums paid as per the scheme rules is payable.
- Under Defined Benefit scheme, accumulated liability shall be paid as per the scheme rules.
- Gratuity and Leave Encashment
- As per the scheme rules, accrued liability and a fixed basic sum insured of Rs. 1,000 will be paid.
- Interest rates: The following interest rates shall be credited to the policy account on a quarterly/annual basis:
- A Minimum Floor Rate of 0.5% per annum will be credited along with the balance in the policy account on a quarterly basis.
- An additional interest rate will be credited over and above the minimum floor rate on a quarterly basis.
- Starting from 5th policy year, if any Non-negative residual additions are accumulated, it will be credited to the policy account to meet the maximum Reduction In Yield (RIY).
- On Resignation / Retirement / Disablement of the member of the scheme:
- Superannuation
- Under the Defined Contribution scheme, the accrued account balance will be paid.
- Under the Defined Benefit scheme, accumulated liability is payable.
- Gratuity and Leave Encashment
- The benefits of this scheme will comprise the accumulated liability
- In case of bulk exits or complete surrender of the policy, Market Value Adjustment (MVA) might be levied (an amount over and above 25% of the Account Value at the outset of the policy year).
Documents Required
The policyholder needs to fill up a simple application form or proposal form along with medical history and the details of each group member need to be submitted.
Exclusions
Suicide Terms – If any insured member commits suicide within one year from the date of the beginning of the policy, 80% of the paid premiums will be paid to the nominee. No additional benefits will be offered. However, this term is not applicable for renewed policies and compulsory employer-employee groups.
FAQs
- How to Surrender the Policy?
- If the policies have a status of Inforce, Paid up, Policy Discontinuance or Cover Continuance, a surrender request can be accepted for policies.
- The application will be accepted only if it is done after the completion of the policy lock-in period.
- If the policy has been assigned, the surrender request should be received from the assignee with the consent of the Policyholder.
- In the case of Unit linked plans, the time and date stamp must compulsorily be pasted on the request form for the NAV allocation.
- If the insured is a minor, the surrender request will be rejected.
- What is form no. 15H and 15G and when are these to be submitted?
The form no. 15H and form no. 15G is the declaration forms that must be submitted to avoid TDS in case you are not liable to pay the income tax at the end of the financial year (i.e. If the total taxable income of an individual does not exceed the basic limit of exemption for that
particular financial year. Form 15H is only for the senior citizens, and Form 15G is for other citizens below the age of 60 years.
- What documents are required for partial withdrawal of the IDBI Federal Retiresurance Group Insurance Plan?
Certain documents are to be submitted for making a partial withdrawal, and they are:
- A request form for Partial withdrawal.
- A canceled Cheque or a bank statement.
- In case the policy is assigned, then a NOC is to be submitted from the assignee
- For fund transfers, a letter of fund transfer to new application needs to be submitted
- A copy of Pan Card
- In case you want to change the residential status NRI – Indian, a confirmation from the bank that stating the Declaration that all premiums are paid from the NRI account