Aviva New Traditional Employee Benefit Plan

Aviva New Traditional Employee Benefit Plan (UIN: 122N102V01)

 

 

Non Linked Non-Participating Variable Insurance Plan

Aviva New Traditional Employee Benefit Plan is a group employer-employee benefit product suitable for employers to meet their fund management needs to make the employee benefit payments e.g pertaining to Gratuity and Leave Encashment on resignation, retirement or death of their employees . The leave encashment benefit may include the encashment of leaves by the members while in service depending upon the scheme rules.

 

Key objectives:

  • To meet the fund management needs of the employer in providing employee benefits related to Non-Pension Schemes like Gratuity, Leave Encashment . To provide tax benefits to the employer which are subject to change from time to time
  • To Provide a life cover of Rs 1000 per member

 

Who is the Master Policyholder?

 

For a tax approved fund established under a trust deed, the trustees will act as the Master Policyholder otherwise Employer acts as master policyholder.

 

Who is an eligible member?

 

Any employee of an organization between 18 and 74 years of age is eligible for this plan.

 

What is the minimum contribution per scheme?

 

Minimum contribution per scheme is Rs. 1 lakh at inception. The contribution in respect of past service liability can either be paid in lump sum or instalments.

 

What are the life cover limits?

 

The sum assured is fixed Rs 1,000 per employee. 

 

What is the minimum group size required?

 

The minimum group size is 10 members.

 

How the scheme will work?

 

This is a Fund Based Group plan for the employers who would like us to manage their funds for the employee benefits e.g. Gratuity, Leave Encashment  benefits as per the scheme.

 

Contribution and Premium:

  • Initial Contribution:
  • For a newly set up scheme, there could be a past service liability.
  • Master policyholder can pay an Initial Contribution to cover the past service liability.
  • The payment of Initial Contribution can be paid either in a lump sum or in installments.
  • Regular Contributions:
  • Regular contribution are payable in respect of future accrual of the scheme benefits.

For both Initial and Regular Contributions:

  • Contributions can be paid either for the group as a whole or it can be member specific depending upon the scheme rules.
  • Contribution(s) payable shall be as per the declaration given by the master policyholder in accordance with the actuary’s certificate as per Accounting Standard-15 (Revised) or any other guidelines/clarifications issued by IRDA from time to time.
  • Alteration in Contribution is permissible only with the Actuary’s certificate as per Accounting Standard-15 (Revised) or any other guidelines/clarifications issued by IRDA from time to time.
  • As per the current regulations, “Nil Contributions” will be allowed only when the funding status of the scheme is in surplus and the same is supported by an Actuary’s certificate in accordance with AS 15 (Revised) or any other guidelines/clarifications issued by IRDA from time to time.
  • Life Cover Premium:
  • There would be a mandatory life insurance cover of Rs.1, 000 per member. The cost of insurance of Rs.1,000 per member will be explicitly charged through mortality charge deduction of Rs.0.75 per thousand sum assured.  

Separate policies will be issued for each scheme of employee benefit.

 

Benefits:

A policy under this product will be credited with the following interest rates/additions from time to time.

  1. A Guaranteed non-zero positive interest rate i.e. a Minimum Floor Rate of 1% per annum shall be credited on the balance of the Policy Account on quarterly basis where the balance of the Policy Account will be at the beginning of each such financial quarter. This Minimum Floor Rate will  remain guaranteed throughout the term of the policy
  2. A Non-zero positive additional interest rate, if any, (over and above the Minimum Floor Rate), shall be declared at the beginning of each financial quarter and shall be credited on the balance of the Policy Account on quarterly basis where the balance of the Policy Account will be at the beginning of each such financial quarter. Such Non-zero positive additional interest rate shall be credited to the balance of the Policy Account value after crediting the Minimum Floor Rate. The Non- additional interest rate shall not be less than 90% of the actual money weighted annualized return of the segregated fund during the previous financial quarter, less Minimum Floor Rate of 1% p.a. 
  3. Non-zero positive residual additions, if any, shall be credited to the Policy Account at the end of each policy year. Non-zero positive residual additions shall be determined as follows:
    1. Goss Investment Yield earned in the Shadow* account at the end of each policy year less Actual yield earned in the policy account value, at the end of each policy year.  For this purpose, the yield earned on each of the Policy account shall be calculated using the money weighted rate of return method at end of each policy year
    2. At the end of each policy year, after minimum floor rate and non-zero positive additional interest rate are credited, non-zero positive residual additions, if any shall be credited to the policy account value which shall at least be equal to 90% of the difference between the Shadow policy account balance and actual Policy Account balance
    3. Shadow policy account value shall be maintained on a daily basis. Such shadow policy account shall be computed based on the actual accruals of all income elements like premiums, top-up premiums, income from investments as and when received and all actual debits i.e. partial withdrawals to the policy account value as and when debited, to arrive at the actual Gross Investment Yield.
    4. Non-zero positive residual additions shall be credited in such a way that these always result in the following or lower Reduction in Yields:

                                                                            

Number of years elapsed since inception of the policy Maximum Reduction in Yield {Difference between Gross Investment Yield and Net Yield (% p.a.)}
5 4.00%
6 3.75%
7 3.50%
8 3.30%
9 3.15%
10 3.00%

 

Employee’s Benefits under the Scheme:

Policy Account shall be utilized to pay various employee benefits as per the scheme rules.

 

Death Benefit:

In case of death of the insured member, apart from the scheme specific death benefit, fixed life insurance cover amount of Rs 1000 per member, shall also be payable.  

Maximum liability for Aviva to make any payment under a Master Policy in respect of all scheme members shall at all times be limited to  the account value available under the Policy Account excluding life insurance cover of Rs 1000(per member).

 

What are the tax advantages?

As per the provisions of the Income Tax Act, 1961 effective April 2012, the following tax benefits are available in case of an approved fund:

  • The contributions/premiums paid by an employer in respect of an employee in a financial year may be treated as an expense for tax purposes in the year of payment.
  • The gratuity received by the employee upto half month's average salary for each year of service, subject to a maximum of Rs. 10,00,000 is exempt under Section 10(10)
  • The life cover payable in case of death of the insured employee is exempt from tax 
  • Tax laws are subject to change from time to time

Download Brochure Policy Account Value  Terms and Conditions  Policy Schedule

UIN: 122N102V01

Advt No: sep 59/16