New LIC New Group Leave Encashment Plan: What is it and who can benefit
LIC New Group Leave Encashment Plan: New Group Leave Encashment Plan by the Life Insurance Corporation of India (LIC) is an insurance plan for companies or business owners who employ a workforce. The plan provides the facility of leave encashment to employees and also offers life cover to compensate the employer for resignation, death or retirement of an employee. The policy has to be taken in the name of the employer or the trustees of a company, says the official LIC website.
An employer can insure itself against leave encashment through resignation or retirement or death of their employees by taking the LIC New Group Leave Encashment Plan. LIC’s New Group Leave Encashment Plan is a non–linked non-participating, fund-based Variable Insurance Product. The LIC website says that the plan offers leave encashment benefits and life cover benefits to the employer so that in case of death of a group member, an amount equal to sum assured will be paid to the employer.
Benefits in case of:
1. In case of the death of an employee
2. In case of a retirment\leaving by employee
Minimum age: 18 years
Maximum age: 75 years
Maximum age at renewal: 80 years
Minimum group size for the existing scheme: No limit
Minimum group size for new scheme: 10
Maximum group size: No limit
Contribution criteria of the plan:
Minimum contribution: Rs 1,000
Maximum contribution: No limit
Loan on policy: Not available
Benefits to the employer:
1. Interest: 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.
2. 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.
3. 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.
Each policy account has a shadow account that is maintained on a daily basis. The numbers in this account are based on the actual accruals of all income elements for the LIC, and the actual debits such as partial withdrawals made on the policy account value. From the fifth year of the policy, the actual gross investment return and reduction in yield are calculated based on this. Given below is the table of the maximum reduction in yield, which is one of the factors influencing the Residual Addition on the policy account.
This plan helps to meet the employer’s Liability for providing Leave Encashment facility to their employees. It also offers life cover benefit so that in case of death of a group member, an amount equal to sum assured will be paid to the employer.