May 27, 2014
The Concept :: Employer-Employee Scheme
Kotak Life Insurance Plans
In today's' scenario, the relation between the employer & employee has to be fine, for the benefit of the Organization / employer & the employee. Whatever be the size of the company, whether it's small or Midsize Or Big, this concept is applicable!
The Employer - Employee Scheme is an wonderful concept of joining hands together forever in terms of Rewards, Retention, Financial stability, Tax treatments etc. Whatever be the size of the company Or number of privileged employees, we can offer this scheme.
As an Employee Reward / Employee Retention Program:
As an Employer what you can offer to your employees?
Or how can you motivate?
This concept of employer - employee Insurance scheme, is purely as an employee retention tool / reward for the benefit of the employee/s.
Better tax saving methods.
Higher Financial stability
Any number of the employees, either in small group Or preferred employees, or all Or in phases to cover employees, selection of employee, choice is yours.
Any payouts (incl. on Death or Maturity or Surrender) under this policy after its issuance would be paid only to the Life Insured or his / her nominee/s as the case may be.
The Concept :: Employer-Employee Scheme
.
How is your employee benefitted?
Life cover for self & Family,
Financial flexibility,
Better Tax savings,
Increase employee satisfaction levels
Compulsory assignment in favour of the employee
There's no cap on SAR- sum at Risk, however subject to employees eligibility, as per kotak Life Insurance, the insurer's guidelines.
Medical check up required depends on the sum at risk
All plans of Kotak Life Insurance like, kotak Assured Savings Plan, Kotak Assured Income Plan, Kotak Money back Plan, Kotak Endowment Plans, any Or all Kotak Savings Plans, Kotak Term Plans except pension plans.
As an Employer How you are benefited?
By offering above Employer - Employee Scheme,
You keep your staff / employee motivated, benefitted, and by retaining them.
Tax treatments -Premium paid is treated as business expense & hence deductable from the total income.
No tax implications', as benefits are being received only by the employee.
You are not related to any sort of beneficial ownership of the policy.
Approve and request automatic assignment of the same completely and unconditionally in favour of the Employees.
All times the Employee or his / her legal heir would be the beneficiary of the policy.
Understand that no benefits under this policy shall accrue or be paid to you (the Proposer / Employer). Any payouts (incl. on Death or Maturity or Surrender) under this policy after its issuance would be paid only to the Life Insured or his / her nominee/s as the case may be.
Tax Benefits:
Tax treatments - Premium paid by employer is treated as business expense & hence deductable from the total income. No tax implications', as benefits are being received only by the employee.
You are advised to seek appropriate tax advice from our tax counsel.
All taxation aspects related to this policy for us and the employee and shall abide by the applicable Tax
For further information you welcome to contact your preferred Kotak Life advisor,
mail to :Kotaklife.arvind@gmail.com Or call+919789450467.
It was a privilege talking to you yesterday discussing on Employer Employee Insurance plans. We had agreed that EE plans are entirely different from KM plans and that the laws pertaining to the latter will not affect the former.
We had discussed that an EE plan upon assignment is taxable in the hands of the employee as perquisite (where employee pays one time tax of 30% on the GSV which would be around 50% of the total premiums paid). And the remaining proceeds or payouts (in the subsequent years as per the policy terms) will be tax free under section 10(10D).
But, after Budget 2013, Section 10(10D) is amended and a new CBDT circular no: 03/2014 dated 24th Jan, 2014 change the definition of Keyman policy. As per new regulation, a Life Insurance Policy taken by a person on the life of another person who is or was the employee of the first-mentioned person or is or was connected in any manner whatsoever with the business of the first-mentioned person.
With a view to plug the loophole and check such practices to avoid payment of taxes, the provisions of clause (10D) of section 10 of the Income-tax Act, 1961 have been amended to provide that a keyman insurance policy which has been assigned to any person during its term, with or without consideration, shall continue to be treated as a keyman insurance policy and consequently would not be eligible for any exemption under section 10(10D) of the Income-tax Act.
Hence, all the acts and circulars make me come to this conclusion: "EE plans are the same as KM plans and all the rules for KM would apply to EE"
The only supporting factor for EE plans is in the IRDA circular which mentions a KM policy to be strictly a Term plan.
All the amendments and circulars after the budget 2013 announcement has changed the entire original meaning of Keyman policy and they seldom refer to maturity proceeds being taxable.
Requesting your suggestion on this.
Thanks.
Vignesh Kumar P
9846106655
Cochin - Kerala
May 29,2015