Claim Settlement Ratio of 99.23%^~

What are the Various Charges Applicable to Unit Linked Group Gratuity Plans?

A group term life insurance scheme is a type of group insurance plan that pays out death benefits to an employee's nominee under employer-employee scheme. In the event of an employee's death, whether by accident or natural causes, the nominee would receive the lump sum insured under the plan.

Investment plans also act as tax-planning tools, as many avenues help reduce tax liability. There are different types of investment plans, and by choosing the right one, you can invest according to your needs and grow your savings.Read Less

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Written ByPalak Bagadia

AboutPalak Bagadia

Palak Bagadia, Associate – Digital Marketing at Bajaj Allianz Life, with experience spanning content and performance marketing, recruitment, employee engagement in the BFSI industry.

Reviewed ByRituraj Singh

AboutRituraj Singh

Rituraj Singh,With over 6.5 years of experience in the insurance industry, Rituraj Singh, Manager- Product & Brand Marketing at Bajaj Allianz Life Insurance overlooks new product launches, compliance, and brand projects, leveraging artificial intelligence and technology to enhance outcomes.

An employer decides to invest a specific amount of money in order to cover the organization's gratuity liability. If the employer chooses unit linked group gratuity scheme, then such sum is invested in a variety of market-linked funds to help earn returns. This lump sum amount is then used to pay gratuity claims for employees who leave the organization. This may or may not offer life cover benefit to the employees depending on the terms of the scheme

Charges Applicable to Unit Linked Group Gratuity Schemes

1. Charges for Fund Management

One of the major charges associated with group gratuity schemes, fund management charges are applicable as a percentage of the total value of assets. It is calculated as a percentage of the total fund value annually and is appropriated post adjusting the Net Assets Value.

In accordance with regulations issued by the Insurance Regulatory and Development Authority (IRDA), the current cap on fund management charges in respect of each of the segregated fund is 135 basis points. Please note that the maximum Fund Management Charge shall be declared by the Authority from time to time.

2. Charges for Premium Allocation:

Premium allocation charges are those charges that are levied by the insurance company to cover its miscellaneous costs and expenses, including underwriting expenses, distributor fees, etc. The premium allocation charges are recovered from premium amount paid by the client to offset these expenses incurred.

3. Mortality Charges:

A mortality charge is levied by the insurance company towards cost of life cover in case of death of the insured individual if the scheme provides for life cover. The mortality charge is determined by the insurer upon assessing the insured individual’s life expectancy based on their age, health conditions, and gender. The mortality charge is used by the insurer for providing the life cover if the person does not survive the policy term.

Source

https://securenow.in/insuropedia/what-are-various-charges-applicable-unit-linked-group-gratuity- plans/

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The above information is for general understanding and is meant to educate the general public at large. The reader will have to verify the facts, law and content with the prevailing tax statutes and seek appropriate professional advice before acting on the basis of the above information.

The views stated in this article are not to be construed as investment advice and readers are suggested to seek independent financial advice before making any investment decisions. For more details on risk factors, terms and conditions please read the sales brochure & policy document (available on www.bajajallianzlife.com) carefully before concluding a sale.

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For more details on risk factors, terms and conditions, please read sales brochure carefully before concluding a sale. The terms and conditions of product/plan as contained in the Policy Document issued by the Company is available on the Web Site. The names of the Company, Products/Plans/funds do not indicate the quality and its future prospects or returns. IN ULIPs, THE INVESTMENT RISK IN THE INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER. Unlike traditional products, Unit linked insurance products are subject to market risk, which affect the Net Asset Values & the customer shall be responsible for his/her decision. Tax benefits are as per the prevailing Income Tax Laws including the Income Tax Act, 1961 and are subject to change from time to time. Goods and Services Tax will have to be borne by the Policyholder as per applicable rates. All other charges shall be levied in accordance with the terms and conditions of the policy.

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