GROUP INSURANCE

GROUP INSURANCE

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GROUP INSURANCE

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GROUP INSURANCE

INTRODUTION

Group insurance is an insurance that covers a group of people,

usually who are the members of societies, employees of a common employer, or

professionals in a common group.

Group coverage can help reduce the problem of adverse

selection by creating a pool of people eligible to purchase insurance who belong

to the group for reasons other than for the purposes of obtaining insurance. In

other words, people belong to the group not because they possess some high-risk

factor which makes them more apt to purchase insurance (thus increasing adverse

selection); instead they are in the group for reasons unrelated to insurance, such as

all working for a particular employer.

A feature which is sometimes common in group insurance is

that the premium cost on an individual basis may not be risk-based. Instead it is

the same amount for all the insured persons in the group. So, for example, in the

United States, often all employees of an employer receiving health insurance

coverage pay the same premium amount for the same coverage regardless of their

age or other factors. In contrast, under private individual health insurance

coverage in the U.S., different insured persons will pay different premium

amounts for the same coverage based on their age, location, pre-existing

conditions, etc.

Another distinctive feature is that under group coverage, a

member of the group is generally eligible to purchase or renew coverage all whilst

he or she is a member of the group subject to certain conditions. Again, using

U.S. health coverage as an example, under group insurance a person will normally

remain covered as long as he or she continues to work for a certain employer and

pays the required insurance premiums, whereas under individual coverage, the

insurance company often has the right to non-renew a person's individual health

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insurance policy when the policy is up for renewal, which it may do if the

person's risk profile changes.In Canada group insurance is usually purchased

through larger brokerage firms such as PACE Consulting because brokers receive

better rates than individual companies or unions.

WHAT IS GROUP INSURANCE?

Group insurance is a health care coverage plan in which individual

employees or members are included under one 'master policy' owned by their

employers. Because the group insurance plan has so many contributors, the policy

often provides coverage for more services at a much lower cost per participant.

Group insurance may be provided by other organizations besides for-profit

companies. Labor unions, churches and other service groups can also obtain

group insurance for recognized members and possibly their dependents.

Individual members of a group insurance plan receive insurance

certificates which demonstrate their eligibility for benefits. If the master policy

held by the employer requires participation in an HMO (health maintenance

organization), then individuals are also registered as members. Other group

insurance policies may be associated with major medical groups such as Blue

Cross/Blue Shield. A major medical policy may or may not restrict an individual's

choice of primary physician and specialists. HMO policies often require a patient

to use a specified physician, who must approve any visits to eligible specialists.

Financing for a group insurance policy is commonly a flexible

payroll deduction, although some companies will absorb the entire cost of the

policy as a benefit for employees. As with many insurance policies, however, the

cost of premiums can rise significantly without warning. If a few participants

receive expensive treatments for serious medical conditions, the rest of the group

may have to absorb the higher premium costs over time. Group insurers don't

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always require physical exams before issuing a master policy, so some

participants may benefit from treatments for pre-existing conditions.

  

DEFINITIONS OF GROUP INSURANCE:

1. Single insurance policy or contract that covers groups of employees and

their dependents.

2. Collection of individuals who have regular contact and frequent

interaction, mutual influence, common feeling of camaraderie, and who

work together to achieve a common set of goals.

3. Subdivision of a set.

4. Insurance purchased by a group of persons, such as the employees of a

company, often at a reduced individual rate.

ADVANTAGES AND DISADVANTAGES OF GROUP INSURANCE

Group insurance benefits can vary widely from company to

company. Almost all policies cover emergency and routine medical procedures

such as regular doctor's appointments and hospital treatment for accidents. Most

cover extended care in hospitals or rehabilitation centers. However, group

insurance may or may not cover the employee's spouse or dependents. Some offer

assistance for vision care or dental work, but coverage may be limited to specific

procedures. Mental health needs may also be covered under group insurance.

Prescription drug expenses often fall under group insurance benefits, but most

likely with a co-pay provision. Under a co-pay plan, the covered individual must

pay an established price out-of-pocket for name brand and generic medications.

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Group insurance is definitely more affordable than a similar

number of individual policies, but there are a few drawbacks. Some members find

their choices of physicians and treatments very limited under an HMO insurance

plan. Even major medical plans can restrict the list of approved physicians, often

called the PMD (preferred medical doctor) policy. Employers who fear large

increases in premiums may take an unusual interest in their employees' private

health issues. Companies may suddenly implement stringent 'no smoking' policies

or strongly encourage other preventative health care programs. Some may find

this interest in their personal health to be intrusive.

Group members enjoy numerous advantages that add value to a workers’

compensation policy, including:

Cost savings

Convenient service

Safety programs

If you are an individual State Fund policyholder, consider converting to a

group program at renewal and discover the difference

SAVINGS ADVANTAGES

All group policies receive a 6 percent discount. Because this group

discount is combinable with other State Fund discounts, employers save

more on their premiums.

Small employers with low payroll save by paying a reduced group

minimum premium.

Because of a group’s mandatory loss-control threshold, employers have an

added incentive to create safer workplaces and decrease their claims costs

and experience modifications.

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Group policyholders may also benefit from additional claims-management

services, such as the Alternative Dispute Resolution program.

SERVICE BENEFITS

Trade association programs may provide advice on business procedures,

legislative advocacy, and necessary forms and documents. Other group

services may include health and dental plans, legal services, and life

insurance.

Many associations perform claims reviews. Close monitoring of claims

can help resolve them sooner, which can result in reduced experience

modification.

As a group member, you receive an additional layer of service from State

Fund’s staff of group specialists. These resources can help employers

more effectively take advantage of the trusted core of State Fund services.

Membership gives employers a voice for member feedback as well as a

network for contacts and information.

SAFETY ENHANCEMENTS

Group members share a commitment to maintaining a good safety record,

with selective underwriting review to maintain low group losses.

Employers get industry-focused safety services that may include the

interpretation of regulations, emergency-care planning, safety seminars,

and a review of workplace accidents and their costs and trends.

HOW TO QUALIFY

Must be a current member in good standing of a qualifying association.

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Must meet the requirements of having the proper designated governing

class code or schedule.

Must meet the group underwriting criteria for the specific association.

Association group is the group of individuals or companies with

similar occupations such as dentists, lawyers, medical doctors etc. The

association arranges group insurance for its member and individual

member pays all the premiums. The master contract exists between the

association and the insurer and individual member receives a certificate

detailing coverage.

I. Advantages:

a) Provide more economical coverage because of mass purchase and group

discounting.

b) Group insurance is arranged by the Association and only requires payment to

enroll.

c) Provide for larger amounts of life insurance and the right to convert life

insurance for each member in the association within 60 days of termination.

d) Certificate is issued showing coverage.

e) Coverage may be more comprehensive and premium is lower than individual

insurance.

II.Disadvantages:

a) Coverage reduces in later years and premiums can be increased without notice.

b) The group insurance plan amendments, restrictions or termination can be

effected without input of member.

c) Most contracts contain restrictive clauses and a two-year suicide clause.

d) The master policy is held by the association therefore some member may

consider to opt out with an individual policy if they consider that is the best

solution.

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e) Contract and coverages are negotiated between association and insurance

company. Member of association has to no say to it.

ADVANTAGES OF GROUP INSURANCE OVER INDIVIDUAL

INSURANCE?

If your company offered you to become a member of their group insurance then

this may be the one of the best news which ever came your way. It is not only a

golden opportunity to save money for your future medical expenses but it will

also guarantee that you will have less worries in case any accidental health events

happen to your life.

MAIN ADVANTAGES OF GROUP HEALTH INSURANCE:

Cost:

One of the major advantages of group health insurance over individual

health insurance is the cost. Everyone needs to have a health insurance so they

will have a guaranteed savings in the future. Unfortunately, not all of us have the

financial resources to purchase an individual health insurance because of the high

rate of premiums it charges to its applicants. Thankfully, group health insurance

will provide you the basic services offered by individual health insurance with

lesser amount of premium. At times, your company may even take the initiative to

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pay the premium for you in exchange of the wonderful service you are providing

the company or if not the entire payment, portion of it.

Underwriting:

One of the common problems experienced by applicants of health insurance is the

process of underwriting. Although some of them have enough resources to pay

the premiums offered by a particular insurance company, they are still being

denied by these surety companies because of their medical condition (although it

is illegal to deny any application for life insurance of any individual, unless in

cases of fraud and misinformation). With group life insurance, you never have to

worry about it because you will not be assessed individually rather you will be

evaluated based on the performance of the group, particularly the performance of

the company where you belong to.

Availability:

Group health insurance policies are almost always offered by all employers to

their employees. By law, it is the role of the employer to provide health insurance

policies to their employees and the most economical way to do this is through

group health insurance companies. There is nothing to choose from because the

company has done the choosing for you. The only choosing which will be laid on

your shoulder is to accept or deny the offer. Of course, there is no reason why you

should even deny a group health insurance policy offered by your company!

COBRA:

Another exclusive feature of group health insurance policies is the Consolidated

Omnibus Budget Reconciliation Act (COBRA) program. This program allows

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employees to continue with their group policies even after leaving your job at the

company. COBRA program even allows employee to get up to 18 months of their

health insurance plans after they have left the company. But of course, the

payment of your premium will not be shouldered by the company instead you are

the one who will pay the monthly or yearly premium of your group health

insurance policy. This is perfect especially if you are in the middle of a medical

crisis before you left the company.

TYPES OF GROUP INSURANCE

I.GROUP LIFE INSURANCE

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The life insurance coverage provided by most group plans is one-year term. The

plan comes up for renewal each year, and both the insurance company and the

employer have the opportunity to consider whether to continue it. For the

insurance company, it is also an opportunity to revise the rates. The employer is

the policyholder and each covered individual is issued a certificate showing his or

her certificate number.

Some group plans include cash value insurance as an option. For example, some

employers offer group universal life, which the employee can purchase by salary

deduction.

Some companies offer individual (non-group) insurance policies purchased at the

place of employment. A representative of the company that provides the group

insurance coverage is often available at the worksite to answer questions about the

group coverage as well as review other family coverage. Additional personal

insurance to fill gaps in insurance protection can be purchased at the employee’s

option.

Other types of insurance include business-related plans such as split dollar

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insurance where individual policies are purchased. Typically, the employer pays

the premiums, with the benefits to be split between the employee and the

employer.

3 TYPES OF GROUP LIFE INSURANCE:

Group life insurance is a type of life insurance where a single contract (master

plan policy) covers and entire group of people. The employer, or entity such as a

labor union, is the policyholder and the employees or members of the group are

the ones who are covered by the group policy. Such coverage is often part of an

employee benefits package, with the employer picking up the tab. There are three

basic types of group life insurance: group term life, group universal life and

variable group universal life.

1. GROUP TERM LIFE:

A type of insurance coverage offered to a group of people. This

coverage will provide a benefit to the beneficiaries if the covered individual dies

during the defined covered period. As with other types of group benefits, group

term life insurance is generally cheaper than comparable individual policy

coverage. For this reason, group term life insurance is often a key component in

employee benefit packages.

The most common form of group life insurance is group term

life. This is typically provided to the employees by the employer in the form of a

one year annually renewable term insurance policy. Upon renewal, both the

insurance company and the employer can determine whether or not to continue.

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Rates can also increase upon policy renewal.

Costs of the policy are mostly or totally paid for by the employer. Typical

coverage amount for group term life policies is equal to 1 or 2 times the

employee’s annual salary. Often, additional coverage in larger amounts than the

master contract) can be purchased by the employee via payroll

deductions.

Group term life itself has three types: basic group term life, supplemental group

term life, and portable term life.

Basic group term life – This is the most typical coverage, providing basic

coverage and often paid for by the employer. The premiums (up to $50,000) paid

for by the employer are considered to be an employee income tax-free

benefit.

Supplemental group term life – Often offered by employers in conjunction with a

basic group term life policy, this type of coverage provides the flexibility for the

employee to purchase additional amounts of coverage. The employee chooses the

type and amount of coverage to suit personal needs and circumstances and pays

the cost for the premiums.

Portable term life – Employees who lose the employer’s group eligibility (they

either leave the group or retire) can take this coverage with them continue their

insurance protection generally until they reach age 70. They make their payments

directly to the insurer, many times available through electronic funds

transfer.

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2. GROUP UNIVERSAL LIFE :

This type of group life insurance policy combines the benefits of term life and

whole life insurance. You can choose to only pay the life insurance premium or

also make payments that build cash value (above the cost of the premium). The

advantages include affordable group insurance rates and simplified underwriting,

along with the potential for cash accumulation and portability. Features of this

type of group insurance include: group buying power resulting in more affordable

premiums, optional cash value account, coverage that can be extended to age 100,

and dependent coverage that’s generally available as a rider.

3. VARIABLE GROUP UNIVERSAL LIFE :

Often used in executive benefit plans or as to fund retiree life insurance, variable

group universal life provides flexible life insurance, a guaranteed account, and

optional sub-account investment choices. Features include: affordable premiums

due to group buying power, investment option (for tax-deferred accumulation),

coverage that can be extended to age 99, optional dependent coverage available as

a rider, and investment account options (that cover a wide range of investment

styles and risks). This type of group life insurance has expenses and fees such as

mortality and expense charges, fund expenses, management and distribution fees.

GROUP LIFE INSURANCE SCHEMES:

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Group Insurance Scheme is life insurance protection to groups of people. This

scheme is ideal for employers, associations, societies etc. and allows you to enjoy

group benefits at really low costs.

1. GROUP TERM INSURANCE SCHEME

A) NATURE OF THE SCHEME:

Group (term) Insurance Scheme is meant to provide life insurance

protection to groups of people. Administration of the scheme is on group basis

and cost is  low. Under Group (Term) Insurance Scheme, life insurance cover is

allowed to all the members of a group subject to some simple insurability

conditions without insisting upon any medical evidence. Scheme offers covers

only on death and there is no maturity value at the end of

the term.

B) PREMIUM CHARGEABLE:

Group (Term) Insurance Scheme is at present offered under One Year Renewable

Group term assurance plan (OYRGTA). Every year on Annual Renewal date LIC

charges the premium depending upon the changes in size and age distribution of

the age group.

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C) DIFFERENT SCHEMES :

Group (term) Insurance Scheme has a number of varieties . The Scheme may

provide for a uniform cover to all members of the group or graded covers for

different categories of members, cover for all amounts of outstanding housing

loans or vehicle advances, or some other benefits (e.g., life cover to supplement

pension or PF benefits in case of death). The schemes may have add-ons like

Double Accident Benefit,Critical Illness Benefit, Disability benefit etc.

D) GENERAL FEATURES OF VARIOUS GROUP INSURANCE

SCHEMES:

1. Premium:

The premium under such scheme may be wholly paid by the

employer or the Nodal Agency. However, the scheme may be contributory

i.e. the members may also contribute.

2. Double Accident Benefit:

Double Accident Benefit, i.e. payment of double the sum

assured on death due to accident (without permanent disability benefit),

may be allowed under Group Insurance Schemes for an extra premium.

3. Eligibility:

For Group Insurance Scheme in lieu of EDLIS the

insurability condition is that should be a member of the Provident Fund

Scheme of the employer. For other GI Schemes of employer-employee

groups the insurability condition is that the member should not be absent

on ground of sickness on the entry date. For all non-employer-employee

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Group Schemes the basic insurability condition is that the member should

be in good health on the date of entry.

4. Administration Of The Scheme:

At the commencement and thereafter on each Annual

Renewal Date, the Group Policyholder will have to send all the member's

data (and particulars of the new entrants from time to time) to the P & GS

unit of LIC. Detailed OYRGTA premium calculation will be made on

each Annual Renewal Date.

2. EMPLOYEE DEPOSIT LINKED INSURANCE SCHEME

What is EDLI ?

All employees to whom the Employee's Provident Fund and

Miscellaneous Provision Act , 1952 applies, have a Statutory liability to subscribe

to Employee's Deposit Linked Insurance Scheme, 1976 to provide for the benefit

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of Life insurance to all their employees. Under the scheme as amended with effect

from 24th June,2000 the insurance benefit is equal to the average balance to the

credit of the deceased employee in the Provident Fund during the last 12 months,

provided that where such balance exceeds Rs.35,000, insurance cover would be

equal to Rs.35,000 plus 25% of the amount in excess of Rs.35,000 subject to a

maximum of Rs.60,000. Thus if the lenth of service is not adequate and/ or the

salary is low the average balance may be substantially less and such the benefit to

the employee's family is either inadequate or non-existent.

The contribution @ 0.50% of each employee's salary is payable by the Employer

to the Provident Fund Authorities.

The Better Alternative:

However, under Sec. 17(2A) of the act, the employer may be exempted from

contributing  to this scheme, if he/she has provided for better insurance benefits

through alternative scheme. LIC's Group Insurance Scheme in lieu of EDLI has

been accepted as one such better alternative.

Advantages To The Employer:

1. The premium payable by the employer is usually less than the total

contribution being paid by the employer to R.P.F.C; particularly when the

salary level is high and average age of the group is low.

2. Settlement of claim is quicker, LIC requires only the death certificate and

the Claim Form from the employer.

3. Premium paid by the employer is treated as normal business expenses for

Income-Tax purpose.

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Advantages To The Employee:

Each employee is covered for a sum assured ranging between 5,000 to

2,00,000 depending upon the current salary and service put in from day one

irrespective of the actual balance in the Provident Fund. Alternatively every

employee/ worker can be covered for a  uniform sum assured which will be

decided  depending upon the group size.

Accident Benefit:

Double accident benefit can be allowed to the extent of the Sum Assured for an

extra Premium.

Steps To Introduce The Scheme:

1. Put up notice for the knowledge of the employees that you are going in for

LIC's Scheme in lieu of EDLI.

2. Apply to the Regional Provident Fund Commissioner under Sec.17 (2A)

of the E.P.F. and M.P. Act 1952 to exempt you from EDLI Scheme. The

application should be accompanied by the prescribed requirements

including the Rules of the Proposed Group Insurance scheme. Central PF

Commissioner, has authorized the R.P.F.C. to grant exemption from the

1st of the month in which the application for relaxation is submitted. LIC

also offers necessary guidance to the employers for seeking relaxation.

3. GROUP GRATUITY SCHEME

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Life Insurance Corporation of India offers its Group Gratuity

Cash Accumulation scheme to enable employers to meet their gratuity liability in

a very simple and efficient manner. The scheme is formulated in compliance with

Part C of the IV schedule of Income Tax Act and tax benefits are available as

provided in Income Tax rules

The gratuity arrangement with LIC provides the following services to the

company:

Fund management under interest accumulation system

Claim settlement on exit as per company rules/gratuity act

Built in Insurance arrangement for the employees for future service

MIS related to Income Tax and trusts accounts and Actuarial valuation

Fund management: Critical issues :           

Liability on account of gratuity experiences sharp increase every year

due to its nature of its computation.  Apart from increase in service, increase in

salary also contributes to increase in liability substantially as the benefits are

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payable on last drawn salary.  Hence funds have to be invested in a conservative

way with a consistent growth and insulated from market risks

The unique advantage with LIC is the contributions made by the

company and interests credited by LIC are irreversible. This ensures highest level

of safety for the total corpus and consistency in future contributions. As the

gratuity payments are statutory and LIC gratuity scheme being the only

investment tool which enjoys sovereign guarantee, gives a greater comfort to

employer.

Liquidity: Funds available with LIC is a single account for investment and

claim settlement. Hence 100% liquidity is ensured for the purpose of claim

settlement

Yield: LIC has been offering very competitive and consistent interest rates

over the years. For the year 2009-10, LIC has offered 9.00% - 9.65% depending

on fund size. The interest declared is net of administrative expenses incurred,

hence no separate charges are charged after crediting the interest.

Interest rate offered by LIC is on daily balancing method. Hence, there is

no idle time for earning interest, hence effective rate of interest is much higher.

Another significant aspect is interest gets compounded annually, hence no

reinvestment issues and no time lags.

No responsibility on trustees on Investment decisions: Trustees are free

from all investment risks and hassles in cash accumulation system. Advantage of

‘real outsourcing’ can be derived by associating with LIC

No hidden charges: The scheme is focused on a long term association

in compliance with investment regulations and statutory payment obligations and

no charges are levied on the transactions for which the fund is meant for.

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Funding can also be in a staggered pattern during the year, but no charges

at entry level for any number of payments. No charges on withdrawals for

resignation or retirement or death. Total corpus comprising of money contributed

by the company and interest credited by LIC is available for claim settlement up

to 100% subject to availability of funds.

Actuarial recommendations: On annual basis, LIC provides this

information to the trustees and recommends the level of contributions.

Claim settlement: On the exit of an employee due to retirement / death/

resignation, trust may prefer a claim from LIC by sending a claim form.  Claim

amount will be made available to trustees. Trustees can have the following

options

Preferring a claim from LIC and paying to employee

Paying the money to employees and seek reimbursement

Paying claims to employees at their end and seeking annual

reimbursement

MIS: LIC provides statement of receipts and payments and actuarial

valuation certificate and certificate of balance for the trust account.

Besides the above said advantages, the scheme also provides for employee

welfare measures with built in insurance cover.

Insurance cover for future service gratuity

 Another salient feature of the Gratuity Scheme with LIC is that it provides for

insurance coverage to the employees to the tune of future service gratuity subject

to certain limits.  The insurance cover can be flexible depending on the

requirements of the Trust. The Group Insurance premium will be commensurate

to the cover provided.

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Income Tax Benefit on Insurance Premium

The insurance premium paid towards the above said benefits is treated as

deductible business expenses to the company.

The premium is not treated as perks in the hands of the employees.

4. GROUP SUPERANNUATION SCHEME

An organization today, has not only to man the various positions

with competent and trained personnel but also has to create an environment

wherein they can give their best and derive a sense of well-being, a sense of

fulfillment and security and take pride in their continued association with the

organization. Provision of pension may be an attraction for such persons to

continue in the organization and give their best to the organization, as with

continuous improvement in longevity a regular income even after retirement has

become a necessity. To provide the pension benefits to employees, an employer

has two alternatives under the provisions of Rule 89 of Income Tax Rules 1962.

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1. Create a privately managed trust fund and as and when a member retires,

purchase annuity from LIC to provide pension for such retiring member.

2. Entrust the Management of the Pension Fund to an Insurer by purchasing

its Group Superannuation Scheme.

ADVANTAGES OF THE LIC MANAGED PENSION FUND:

The LIC managed Pension fund has the following added and distinct advantages:-

1. An attractive and competitive yield on the fund will be credited to Fund

A/c.

2. The problem of liquidity gets automatically eliminated as soon as the fund

is managed by LIC.

3. We conduct free actuarial valuations of the funds administered by us from

time to time.

4. The Administration of the fund is carried out by us in a scientific manner

and claims are promptly settled.

5. Group Insurance in conjunction with the Group Superannuation Scheme

can be taken by an Organization to provide for an attractive lump sum

payment on the unfortunate death of a member while in service, at very

nominal cost.

SUPERANNUATION SCHEME PROVIDED BY LIC:

The employer contributes a certain fixed percentage of salary of each member.

Such Contributions are accumulated by LIC and the accumulated amount is

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utilized to provide various benefits as mentioned below.

BENEFITS:

1) On Retirement:

On Retirement of a member, the corpus (contributions plus interest) is

utilized to provide the pension as per his choice.

2) On Death:

The Pension is payable on the life of the beneficiary. Corpus is utilized

towards the payment of pension of the type the beneficiary may opt and the

benefit so received is tax free. A lump sum payable by way of death besides the

pension, if the employer has taken Group Insurance Scheme in conjunction with

the Group Superannuation Scheme.

3) On Withdrawal:

He can get the equitable interest transferred to the Superannuation

Scheme of the new employer or opt for immediate or deferred pension.

PENSION OPTIONS PROVIDED BY LIC:

1. Life Pension ceasing at death.

2. Life Pension with Return of Capital and Group Pension Terminal Bonus

on death.

3. Life Pension guaranteed for 5,10,15 or 20 years and life thereafter.

4. Joint Life Pension payable on the last survivor of the employee and

spouse.

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5. Joint Life Pension payable to the last survivor of the employee and spouse

with return of capital on the death of the last survivor. If desired , 1/3rd of

the pension can be commuted at vesting.

ELIGIBILITY CONDITION:

It is not obligatory or statutory on the part of the employer to provide for pension

to all employees. It is entirely upto him to decide to which class/ classes of

employees he desires to extends the scheme. The eligibility conditions may be

defined on the basis of designation or salary. (However, after the categories are

specified, employer cannot discriminate between the employees and thus extends

the scheme uniformly).

CONTRIBUTION:

The maximum annual contribution that an employer can make to the Pension

Fund and Provident Fund is restricted by the Income Tax Provisions to 27% of the

annual salary (basic plus D.A.) The annual contributions are treated as deductible

business expenses.

WHO PAYS CONTRIBUTION?

Mostly the employer contributes, but is so desired, both the employer and the

employees may contribute, in which case the scheme is called a Contributory

Pension Fund Scheme.

TAX BENEFITS:

The provisions relating to the approved Superannuation Scheme are set out in Part

'B' of the Fourth Scheme of the Income-Tax Act, 1961 and Part XIII of the

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Income Tax Rules , 1962. The income tax concession will be available only if the

scheme is approved by the CIT.

1. The annual contribution is treated as a deductible business expense in term

of Section 36(1) (iv) of the I.T. Act.

2. In terms of a Notification issued by the Central Board of Direct

Taxes .80% of the contribution (s) towards the past service liability are

treated as deductible business expenses spread over in the subsequent

years of payment.

3. The employee's contribution , in the case of the Contributions scheme

qualifies for exemption under Section 80C of the Income-Tax Act.

GROUP INSURANCE SCHEME IN CONJUNCTION WITH

SUPERANNUATION SCHEME:

The members of the Group Superannuation scheme can be covered under Group

Insurance in conjunction with superannuation scheme so as to provide death risk

cover while in service subject to certain conditions.

5. GROUP SAVINGS LINKED INSURANCE SCHEME

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The people working in the metropolitan cities, occupied as they

are in their day to-day activities where inflation is inevitable, find difficult to

provide adequate security for their families, Individual insurance with high

premium in fact does not provide adequate insurance protection. Their need for

insurance protection during service coupled with adequate savings for carefree

retired life remains unfulfilled. Keeping this in mind, LIC has come out with an

attractive insurance scheme viz. Group Savings Linked Insurance scheme at a

very low cost. Central Government has a similar scheme with minor

modifications. Semi-Government Organizations, Public Sector Organizations and

also Large private business houses and industrial enterprises have introduced this

scheme, the salient features of which are as under:

I) OBJECTIVES OF THE SCHEME:

Protection at low cost without individual evidence of health.

Attractive returns on savings to meet post retirement needs.

Simple procedures for granting life cover to large groups under one

umbrella.

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GROUP INSURANCE

II) INTRODUCTION OF THE SCHEME:

a) The Scheme can be introduced by employers provided certain percentage of

employees is willing to join the Scheme.

b) For the new entrants to the Company, the membership of the Scheme is

compulsory.

III) PREMIA:

It is decided on the basis of Group size and the occupation of the

group.Premium has two components i.e. Risk Premium and Savings

Premium.Risk Premium is utilized to offer life cover and the Savings Premium is

accumulated in members account.

IV) ACCIDENT BENEFIT:

Double accident benefit can be allowed to the extent of the Sum Assured

for an extra Premium.

V) INTEREST ON SAVINGS:

The present rate of interest allowed on saving portion of premium is 8%

compounding yearly.

VI) ELIGIBILITY TO JOIN THE SCHEME:

Any employee irrespective of his present state of health is eligible to

join the scheme subject to certain conditions. The only insurability condition is

that the employee should not be absent on medical ground on the date of

commencement of the scheme. All employees who have not crossed the

retirement age are eligible to join the scheme. All future employees have to join

the scheme compulsorily.

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GROUP INSURANCE

VII) TAX BENEFITS:

Employees' total contribution, savings as well as risk premium is entitled for

income-tax rebate under Sec. 80C of the Income Tax Act. The entire claim

amount including interest earned payable on retirement or leaving service or on

death is free from income-tax. The premium paid by the employer towards

insurance cover is treated as business expenses.

6.GROUP LEAVE ENCASHMENT SCHEME

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GROUP INSURANCE

Many employers are providing Leave Encashment benefit in addition to other

retirement benefits to their employees which is a lumpsum amount payable to the

employees or their dependants on retirement, death, disablement, voluntary

retirement etc.

FUNDING OF LEAVE ENCASHMENT:

End-of-the-year leave encashment facility available to employees,

can be a huge liability to the company. So can be Medical Leave Encashment, if

provided for. To meet this need of entrepreneurs and businesses, LIC has

introduced Group Leave Encashment Scheme. Just pay a yearly premium, fund

your leave encashment liability and let LIC take care of your worries.

NATURE OF LIABILITY:

The amount depends upon the leave to the credit of the employee and

his/ her salary at the time of exit. Liability is of increasing nature as it is linked

with salary as well as leave position.

As per the amended section 209 (3) of the Company's Act 1956 and

Accounting Standard (AS-15) dated January, 1995, the employers have to account

for the liability in respect of leave encashment facility, if any, available to the

employees and to provide for the same in their Annual Accounts. It is, therefore,

necessary for the companies to ascertain liability in respect of Leave Encashment

facilities, if any, available to the employees and provide for the same in the books

of accounts every year. It helps the employers in ascertaining the true cost of their

products and services.

THE FEATURES:

Group Leave Encashment Schemes (GLES) of LIC helps the employers in

funding of their lave encashment liability. The salient features of the scheme are

as follows:-

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GROUP INSURANCE

1. The Company will submit the employees' data and rules for Leave

Encashment. LIC will make actuarial valuation and find out the funding

requirements which shall be quoted to the company. The company will

contribute as per the advice of LIC.

2. A uniform life cover per employee or graded cover will be provided under

One Year Renewable Group Term Assurance Plan of LIC. A small term

insurance premium will be charged in addition to contributions for

funding.

3. A Running Account will be maintained under the scheme and the

contributions (excluding term assurance premium) will be credited to this

account and all claims except term assurance cover will be settled out of

the Running Account. Interest at the rate declared by LIC from time to

time will be credited to the Running Account at the end of the financial

year.

BENEFITS:

1. On the exit of an employee or encashment of leaves during the service the

Leave Encashment amount will be paid from the Fund of the scheme

maintained with LIC.

2. On the death of an employee, in addition to his / her leave encashment

benefit, his/her family will be entitled to the amount of Insurance Cover,

which will be tax-free.

3. The Life Insurance Corporation of India will do the Actuarial Valuation

and will provide necessary certificate as per AS-15.

4. The amount of Term Insurance Premium paid for Life Insurance Cover

will be treated as business expenses.

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GROUP INSURANCE

UNDER THE SCHEME, THE PREMIUM DEPENDS UPON:

1. Age (nearer Birthday) at entry of the member into the Scheme.

2. Outstanding loan amount at entry date.

3. Term of loan.

4. Schedule of repayment.

5. Rate of interest with which the loan was availed.

Any borrower may become member of this scheme . The minimum term of

assurance is 3 years. Existing Borrowers can join the scheme with certain

conditions within 6 months of the commencement of scheme.

In case of death of the member during the coverage period ,life cover on the

anniversary date preceding the date of death is payable .The claim proceeds are

used to square off the outstanding loan.

7. GROUP CRITICAL ILLNESS RIDER

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GROUP INSURANCE

Critical Illness product (accelerated benefit) is basically offered as an optional

Rider benefit to all Employer-Employee group policyholders (both existing and

new schemes) along with Group term insurance schemes i.e. OYRGTA ( One

year renewal group term assurance ) type schemes. Schemes along with which

the rider can be given shall include Group insurance, Group Gratuity (CA),

Group Leave Encashment and Group insurance in conjunction with

Superannuation. The Benefit will not be extended to spouses or dependants.

Only full time permanent employees who are actively at work will be eligible

for Critical Illness cover. The relevant premium is to be paid by the Group

Policyholder.

FEATURES :

1. The Group critical illness rider benefit to employees is given as

an add on benefit to the Group policy which has an element of

life cover.

2. The Group Critical Illness rider allowable for each member shall

be a minimum of 20 % of sum assured under the base plan and

shall not exceed 100% of the sum assured under the base plan

subject to minimum of Rs. 50 Thousands and maximum of Rs 20

lac per member.

3. All members of the attached policy should participate at

inception and all eligible new members should compulsorily

participate.

4. The diseases covered under the rider (subject to certain

exclusions) are:

1. Cancer  2. Coronary Artery (Bye pass) Surgery  3. Heart attack

(Myocardial infarction)  4. Stroke

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GROUP INSURANCE

2. Kidney failure (End stage renal disease)  6. Aorta (Surgery of Aorta)  7.

Heart valve replacement

3. Major Burns.

BENEFITS :

1. The Critical Illness Accelerated benefit is payable upon the first

incidence of any of the 8 specified diseases and evidenced as per

the diagnostic criteria specified. The rider shall terminate on

payment of the Critical Illness benefit.

2. The Group Critical illness (Accelerated) Benefit pays a lump sum

amount as a percentage of Sum assured out of the Sum assured

under the life cover in the event of occurrence of 8 diseases

covered under the rider.

3. No Critical Illness Benefit shall become payable to a member if

the disease occurs within 90 days of the start of the coverage for

that member of the scheme. This period of 90 days shall be

called  “Waiting period”.

4. In case of death nothing is payable under this rider. However,

under the base plan (i.e., the scheme on which the rider is opted

for) benefits as under shall become payable :

1.     A benefit equal to base sum assured if no critical illness benefit is payable

or has been paid  earlier.

2.    If critical illness benefit is payable or already paid, the benefit is reduced by

pg. 36

GROUP INSURANCE

the amount of critical illness benefit payable or already paid. In other words, the

difference between the base sum assured and the critical illness benefit already

paid is payable on death.

EXCLUSIONS:

1. Diseases in the presence of an HIV infection.

2. Diseases that have previously occurred in the life of the member of the

scheme i.e. the benefit is payable only if the disease is a first incidence ,

regardless of whether the earlier incidence occurred before the individual

was covered or whether the insured was covered by us or another

insurer.

3. Any disease occurring within 90 days of the start of the coverage for

each member of the scheme. (I.e. during the waiting period).

4. No payment will be made for any claim directly or indirectly caused by,

based on, arising out of, or howsoever, to any Critical Illness for which

care, treatment, or advice was recommended by or received from a

Physician, or which first manifested itself or was contracted before the

start of the policy period, or for which claim has or could have been

made under any earlier policy.

5. Any congenital condition.

6. Alcohol or solvent abuse or taking of drugs, narcotics or psychotropic

substances unless taken in accordance with the lawful directions and

prescription of a registered medical practitioner.

7. Failure to seek or follow medical advice.

8. War, invasion, act of foreign enemy, hostilities(whether war be declared

or not),armed or unarmed truce, civil war ,mutiny, rebellion, revolution,

insurrection, military  or usurped power, riot or civil commotion, strikes.

9. Taking part in any naval, military or air force operation during peace

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GROUP INSURANCE

time.

10. Participation by the member of the scheme in any flying activity, except

as a bona fide, fare-paying passenger of a recognised airline on regular

routes and on a scheduled timetable.

Additional exclusions may be disease-specific and would be incorporated into

the definition of the disease.

TAX BENEFITS :

1. All benefits under the policy are also subject to the Tax Laws and other

financial enactments as they exist from tome to time.

2. The premium payable are exempted under section 80D of Income Tax

act.

II.GROUP HEALTH INSURANCE

pg. 38

GROUP INSURANCE

Group health insurance makes individual coverages available on a group basis. A primary advantage is the purchasing power of the group that achieves reduced acquisition costs for the insurance company. The insurance company is then able to reduce the rate it charges to provide insurance for each individual member of the group. The Group is in a better position to bargain with the insurance company for additional benefits for its members. There are a variety of types of group health insurance plans, the major distinctions being the mechanism used for purchasing the insurance. Common varieties of group health insurance plans include:

1. Fully Insured Employer Group - The employer contracts directly with the insurance company to provide certificates to covered employees. Typical arrangement is either for major medical or health maintenance organization (HMO) coverages.

2. Small Employer Group - Insurance companies group certain industries together and then gather small employers together to form a larger group. These groupings enable the insurance company to better predict the cost of providing the insurance. The small employers can then get coverages otherwise not available unless charged a much higher rate. All the small employers get the same policy without deviation.

pg. 39

GROUP INSURANCE

3. Large Employer Group - same as a fully insured employer group with direct contract between the insurance company and the employer to provide individual certificates to covered employees.

4. Health Maintenance Organization (HMO) - a group program under which the organization provides a full range of medical services to participants. Participants are either assigned or select from a group of general practitioners, who then refer their patients to specialists when the need arises. Good generalized system of providing medical care which is marked by curtailment in selection by the individual participant of the health care provider who render services. Individual participants insured by an HMO are called “enrollees”.

5. Self-Funded ERISA - available to large groups. The group contracts with an insurance company or third-party administrator to handle the paperwork. The group pays for all costs associated with the operation of the insurance plan itself, along with the added cost for administration.

6. Association Group - similar to a fully insured employer group, the distinction being that instead of an employer, it is a different type of group, such as a credit card company offering insurance as a benefit to its cardholders or a church group offering insurance to its parishioners.

7. Group Managed Care - a long-term health insurance plan offered through the group or association.

8. Preferred Provider Organization – another kind of health care network (doctors, hospitals, and other health care providers) that contracts with health insurance companies.

TYPES OF GROUP HEALTH INSURANCE:

pg. 40

GROUP INSURANCE

Health insurance coverage for an individual can be quite

expensive. Many employers offer health insurance coverage to full-time

employees as a benefit of employment knowing that individual coverage would

be far too expensive otherwise. Employers and other organizations are able to

achieve lower monthly premiums through contracts with insurance companies

because they provide large groups of customers. There are several group plans

used for this goal.

LARGE EMPLOYER GROUPS:

Large employers contract with a single national health insurance

company to provide coverage for employees. Each employee receives coverage

based on certain criteria such as length of employment and hours worked and

cannot generally be turned down for pre-existing conditions due to contractual

obligations between the employer and insurer. Employees have ways to tailor

coverage to meet specific needs such as buying into a dental or eye plan option

along with choosing deductible rates and coverage limits.

pg. 41

GROUP INSURANCE

SMALL EMPLOYER HEALTH GROUPS:

A small employer's group is an insurance plan to cover groups of

employees from multiple employers within the same industry. This enables

insurance companies to get a better feel for the liability issues within certain

industries, according to insurance information website Free Advice. It also allows

small businesses the opportunity to provide insurance for employees that would

otherwise only be available at higher monthly premiums. Unlike large group

health plans, the coverage choice for employees in small employer health plans is

uniform throughout with everyone getting the same coverage.

HEALTH MAINTENANCE ORGANIZATIONS:

Health Maintenance Organizations, or HMO's, are contracted by

large employers to provide a full array of health options for employees. Those

insured through an HMO are assigned specific doctors they are required to visit in

order for medical expenses to be covered. They may choose from a roster of

approved doctors/physicians. A referral from an HMO-approved doctor is

generally required in order to see a specialist when the need arises.

HEALTH ASSOCIATION GROUPS:

A health association group is not insurance through an employer or

directly through a health insurance provider, but rather through a third party such

as a credit card company or special interest group. In order to participate in these

group plans, you must be a member of the organization offering the plan. Spouses

and dependents are sometimes eligible for these health insurance plans, but you

should check with the specific plan to see if these people can be added.

pg. 42

GROUP INSURANCE

III.FARMERS INSURANCE GROUP

The Farmers Insurance Group of Companies is a personal lines property and

casualty insurance group providing homeowners insurance, auto insurance, life

insurance, and financial services in the United States. It is the third largest

insurance group in the US servicing over 10 million households in 41 states.[5]

Farmers Group Inc. is headquartered in Los Angeles, California but is 100%

owned by Zurich Financial Services based in Zurich, Switzerland.

STRUCTURE:

Farmers Insurance Group of Companies is composed of a holding company and

the various underwriters, reciprocal inter-insurance exchanges, and smaller

companies associated with it.

Farmers Group, Inc. is the holding company and provides insurance

management services. It acts under the dba Farmers Underwriters

Association. Together with its wholly owned subsidiaries, Truck

Underwriters Association and Fire Underwriters Association, they act as

the attorneys-in-fact for three reciprocal inter-insurance exchanges —

Farmers Insurance Exchange, Truck Insurance Exchange, and Fire

Insurance Exchange. However, the Farmers Group, Inc. management

company is not an owner of these reciprocal inter-insurance exchanges.[5]

The exchanges own several other insurance companies and insurance

holding companies, including Mid-Century Insurance Company, Foremost

Insurance Company, and Bristol West Insurance Group, as well as

Farmers Financial Solutions, LLC, a registered broker-dealer. In this

structure, the exchanges hold the insurance risk, while Farmers Group,

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GROUP INSURANCE

Inc. earns management fees by running the exchanges' affairs. The only

exception is Farmers New World Life Insurance Company, a life insurer

owned directly by Farmers Group, Inc.[1][5][6]

Farmers New World Life Insurance Company started as New World Life

Insurance Company in 1910. It was acquired by Farmers in 1953 and

provides insurance products including flexible universal life insurance,

traditional term life insurance, whole life insurance, and annuities.[1][5]

Farmers Financial Solutions, LLC. was created by Farmers in 2000 to

provide financial products to customers.[7]

Foremost Insurance Company was acquired in March 2000 and provides

specialty insurance including mobile homes, motor homes, travel trailers

and specialty dwellings.[1][5]

Bristol West Insurance Group, based in Davie, Florida, was acquired in

July 2007. In 1973, it began providing private passenger auto insurance to

residents in Florida and now provides liability and physical damage

insurance - focusing exclusively on private passenger vehicles across the

United States.[1]

21st Century Insurance, based in Woodland Hills, California, was acquired

on July 1, 2009.

PRODUCTS:

Auto insurance - Farmers provides auto insurance coverage for autos and

collective automobiles.

Motorcycle insurance - Farmers provides motorcycle insurance coverage

through their Foremost Insurance Group.

Home insurance - Farmers provides insurance for homes, condominiums,

and mobile/manufactured homes. Farmers also provides special coverage

for renters, earthquakes, floods, and identity theft.

pg. 44

GROUP INSURANCE

Life insurance - Farmers provides term, whole, and universal life

insurance. Life annuities are also issued by their Farmers New World Life

Insurance Company.

Recreational insurance - Farmers provides insurance coverage for boats,

ATVs, RVs, and travel trailers.

Financial services - Farmers provides mutual funds, variable annuities,

and variable universal life insurance through Farmers Financial Solutions,

LLC.

Business insurance - Farmers provides business insurance coverage for

landlords and commercial property owners, contractors, condominium

homeowner associations, and businesses in the manufacturing, service,

restaurant, retail, wholesale, and auto service & repair industry.

IV.EMPLOYEES GROUP INSURANCE

Employees normally work with utmost commitment when they believe their

organization sincerely cares for their future and wellbeing. Max New York Life

offers a suite of Group Insurance plans, which would provide you and your

employees with a multitude of benefits.

Max New York Life's Group Term Insurance Scheme is a unique, simple and

flexible scheme, which is considered a better alternative to the Employee Deposit

Linked Insurance Scheme (EDLI) because of the benefits it offers to both the

employer and the employees.

FEATURES:

pg. 45

GROUP INSURANCE

Under Section 17 (2-A) of the Provident Fund Act, the Central Provident Fund

Commissioner may, if requested to do so by the employer, by notification in the

Official Gazette, exempt, whether prospectively or retrospectively, any

establishment from the provisions of the EDLI scheme, if he is satisfied that the

employees of such establishment, without making any separate contribution or

payment of premium, enjoy life insurance benefits more favaorable than the

benefits under the EDLI scheme.

Max New York Life Insurance Co. Ltd offers Group Term Insurance Scheme, a

unique, simple and flexible scheme, which is a far better alternative to the

Employee Deposit Linked Insurance Scheme (EDLI) because of the benefits it

offers to both the employer and the employee. The Employees Provident Fund

organization has approved this scheme as an alternative to EDLI scheme.

BENEFITS:

The organization will enjoy the following advantages by subscribing to the Max

New York Life Group Term Insurance as compared to the EDLI scheme:

The premium payable by the employer under the Max New York Life

Group Term Insurance Scheme will be usually less than the total

contribution being paid by the employer to Regional Provident Fund

Commissioner, particularly when average age of the group is low and

the employer is in a low-risk industry.

Flexibility to opt for either a uniform flat cover for all employees or a

graded cover as per notional PF balance.

Well defined and simplified claim process will ensure quicker and

hassle-free claim settlement.

Administrative convenience for additions and deletions of members

with no elaborate paperwork.

pg. 46

GROUP INSURANCE

SWOT ANALYSIS

Strength:

a) Money power, which makes them ignorant about the gestation

period.

b)Brand image, business expenditure & innovative products.

c)The employees are very selective chosen have excellent

communication skills,

d) Service quality,, which is the crux of their mission.

e) Large network branch which is helped to curt for the payer.

Weakness:

a) High market is literally untapped, out of high target for financial

advisors & for the sales department.

b) Many competitors in the market offer same products

the title different in the premium & offer.

c) Sustainabie to risk associated with invest in market.

d) Try to catch middle lower level

Opportunity:

a) Huge market is literally out of 320 millions insurable markets only

20 percent of the population insured.

pg. 47

GROUP INSURANCE

b) health insurance & pension schemes, an estimated market potential

of approximately $15 billion,

c) Group insurance give insurance coverage both to the ppersons &

child so, that like would be conversation both cases.

Threats:

a) Players like BAJAJ & BIRLA Sun life with low-premium for the

similar plan.

b) Entry of many other private company with equally strong expense

& financial strength of employers making the competition different &

saturating the urban market.

c) Current government policies do not encourage domestic saving. If

tax liable.

TOP 10 PLAYERS IN INSURANCE COMPANIES IN INDIA

1. Life Insurance Corporation of India:

Life Insurance Corporation (LIC) came into existence on 1st September 1956

through the amalgamation of 154 Indian insurance companies, 16 non-Indian

companies and 75 provident. The amalgamation was achieved with the help of

Life Insurance Act passed by the Parliament in the same year. The LIC was

pg. 48

GROUP INSURANCE

created with the goal of reaching all the insurable people in the country and

providing them financial coverage at a reasonable price. In the year 1956, LIC

had 5 zonal offices, 33 divisional offices and 212 branch offices. With time there

was a need for a branch office at every district headquarter and many branches

were opened, which raised the pace of the organization.

LIC now has 2048 fully computerized branch offices, 100 divisional offices, 7

zonal offices and the corporate office. At present, online premium collection

facility is being offered in selected cities as LIC has tied up with some banks and

service providers. For providing customer satisfaction the organization has

introduced various schemes such as ECS, ATM premium payment facility, IVRS,

Info centers which are set up in various cities including Mumbai, Bangalore,

Chennai, Kolkata, New Delhi, Pune and many more. It has also come up with

SATELLITE SAMPARK offices providing easy access to policyholders. LIC has

crossed many milestones and set standards for itself fostering unmatched

performance.

Objectives:

Holding the money with obligation and using it in the best possible

manner in the interests of the policyholder and the community.

Bringing attractive savings plans and making them easily accessible to the

policyholders.

Giving attractive returns to the people and keeping in mind national

priorities.

Being trustworthy to the customers and develop the spirit of corporate

social responsibility.

Spreading insurance in both rural and urban areas and covering all the

insurable persons at a reasonable cost.

Bringing in plans and policies favorable to the changing environment.

pg. 49

GROUP INSURANCE

Providing efficient service and involving people in the organization for

their satisfaction.

3. Bajaj Allianz General Insurance Company Limited :

Bajaj Allianz General Insurance Company Limited is a joint venture

between Bajaj Auto Limited and Allianz AG of Germany.

Bajaj Allianz General Insurance came into existence on 2nd May 2001,

when it got certification of Registration from the Insurance and Regulatory

Development Authority. Bajaj Auto has a share of 74%, whereas Allianz

has the remaining 26%. In the very first year, the company made a strong

position for itself in the industry and was reckoned amongst the top private

insurers. The premium income of the company as on 31st March 2006 was

Rs. 1285 crores, whereas the profit after tax made was Rs. 52 crores. Bajaj

Allianz has a Pan India network covering over 100 towns from Jammu to

Thiruvananthapuram and aims to spread its operations in many other

cities.

The vision of the organization is to be the first choice for customers, and

provide job satisfaction to the employees and create shareholder value.

The organization strives to excel in its products and services, providing

total customer satisfaction.

Bajaj Allianz serves customers in all areas of General and Health

Insurance as well as Risk Management. It has in-depth knowledge of the

local market and extensive distribution network with expertise, stability

and experience. It has a capital base of Rs. 147 crores, and is allowed to

serve both the General and Health insurance.

It has achieved iAAA rating, by ICRA Limited and has the highest claims-

paying ability and a stable position in the market. In a 2006 survey,

pg. 50

GROUP INSURANCE

Business World has rated it among the Most Respected Companies,

putting it at No.2 position in Insurance sector.

4. The Company provides the following products under general insurance:

Travel Insurance

Asset Insurance

Health Insurance

Corporate Insurance

3. ICICI Prudential Life Insurance Company:

ICICI Prudential is a joint venture between ICICI bank and Prudential plc, both

having strong operations in their respective countries. ICICI bank is one of the

leading banks in India providing quality financial services and Prudential is an

international financial service provider headquartered at United Kingdom. ICICI

and Prudential have respective shares of 74% and 26%. The Company started

operating in December 2000. Currently, total capital with the company is Rs.

18.15 billion.

ICICI Prudential was the first insurance company in India to receive a National

Insurer Financial Strength rating of AAA (Ind.) from Fitch ratings. It has been

given the honour of being among the Most Trusted Brands in the industry by

Economic Times for 3 consecutive years. It has a network of 450 branches, over

1,50,000 insurance advisors and 18 bancassurance partners.

As the organization grows and develops, it keeps introducing new range of

products and services and enhancing the quality of plans and solutions given to

the customers. The distribution network is one of the best, and is spreading across

the length and breadth of the country. As on December 31, 2006, it had made

imprints in over 360 cities and towns in India. It has over 1,75,000 advisors across

pg. 51

GROUP INSURANCE

the country, serving clients with full commitment. It has tied up with ICICI Bank,

Bank of India, Federal Bank, Lord Krishna Bank, some co-operative banks,

NGOs, MFIs and corporates for making inroads into the rural areas.

4. ICICI Lombard General Insurance:

ICICI Lombard General Insurance Company Limited is a joint venture between

ICICI Bank Limited and Fairfax Financial Holdings Limited. ICICI bank is

India's second largest bank; Fairfax is Canada-based, engaged in general

insurance, reinsurance, insurance claims management and investment

management. ICICI Lombard General Insurance Company commenced its

operations in general insurance business in August 2001.

ICICI Lombard is India's number one private insurance company; it is also the

first general insurance company to be given certification of ISO 9001:2000. The

company provides simple and fast documentation, fast claims settlement, online

policy issuance, and comprehensive product line.

It has also been given iAAA rating by ICRA for having highest claims paying

ability. In the very first year of operations, it was able to reach financial

breakeven and achieve underwriting breakeven in the second year. Security is

provided through encryption and it is the first company to provide digitally signed

documents. It has been honored as the most Customer Responsive Company by

the Economic Times. Times of India has designated it as the Best Housing

Insurance in the Smart Living Awards by 360 degrees. It has also been awarded

Gold Shield for "Excellence in Financial Reporting". It is among the top three

companies to be awarded the "General Insurance Company of the Year" at the

10th Asia Insurance Industry Awards.

5. Birla Sun Life Insurance Company Limited:

Birla Sun Life Insurance Company Limited (BSLI) is a joint venture between

pg. 52

GROUP INSURANCE

Aditya Birla Group and Sun Life Financial Inc. BSLI started functioning in

March 2001 after getting the certificate of registration from IRDA.

Birla Sun Life Insurance Company Limited introduced unit Linked Life Insurance

Solutions in India. Within a short span of time it was able to establish itself as a

leading player in the Private Life Insurance Industry. It has been innovative and

come up with customer-centric products to provide safety and services. The

company has web-enabled IT systems for better customer services and a strong

distribution channel which is easily approachable. The company shows corporate

governance and a high degree of transparency in all business practices. It has

professional knowledge and global expertise of Aditya Birla Group.

Birla Sunlife Insurance has been providing first class financial solutions to its

customers and has been amongst the top three private sector life insurance

companies.

Its mission is to be amongst the top players in the eyes of customers and the first

choice of insurance and retirement solutions to individuals and groups. These

innovative solutions are linked with global and technical expertise and are

deployed by a multi channel distribution network and enhanced technology.

The company aims at keeping all people associated with it - customers, clients,

stakeholders and employees- happy and fully satisfied. It wants to provide value

added products and services to the customers, job satisfaction to employees and

highest returns to the shareholders.

Qualities like integrity, commitment, passion, and speed are the core values of the

company. The products offered by the company are:

pg. 53

GROUP INSURANCE

6.TATA AIG General Insurance:

Tata AIG General Insurance Company Ltd. is a joint venture between Tata

Sons and American International Group, Inc. (AIG). The Tata Group is

holding 74 per cent stake and the rest 26 percent is held by AIG. The company

has got the expertise, knowledge and strength of both the organizations.

Tata AIG General Insurance Company was founded on January 22, 2001. It

offers general insurance in various categories, such as automobile, home,

personal accident, travel, energy, marine, property and casualty and

specialized financial solutions.

Jamsetji Tata founded Tata Group in 1860s. It has an estimated turnover of

around US $ 14.25 billion. It has spread its operations in various fields such as

steel, power, hotels, airlines, software services, communications, etc. Some of

its major projects have been Tata Tea, Tata Steel, Tata Chemicals, Titan,

Tanishq, Voltas, Westside and Tata Motors. Its imprints are made on the

telecommunication and technology sector. Regarding telecommunications, it

is the largest international long distance service provider. Approximately two-

third of the equity of Tata Sons is held by a host of national institutions in

science and technology, medical services and performing arts. By combining

the ethical values with business acumen and fulfilling its commitment to the

nation, it has become one of the largest groups in India.

American International Group, Inc. (AIG) is the leading international

player in insurance and financial services. Its network spreads across 130

nations. AIG member companies serve all types of customers, be it

commercial or individual. AIG is among the leading insurers and the

largest underwriter of insurance. Aircraft leasing, financial products and

trading are some of the services offered by AIG. AIG has a global

pg. 54

GROUP INSURANCE

expertise of fulfilling the customer-centric needs. It has specialized

investment management capabilities in equities, fixed income, alternative

investments and real estate. AIG's stock has been listed in the New York

Stock Exchange as well as stock exchanges in London, Paris, Switzerland

and Tokyo.

The organization caters to individuals, small businesses and corporates.

Individual plans include motor, home, accident & health and travel

insurance, whereas corporate plans include accident & health, travel,

energy, property, marine and liability plans.

7. New India Assurance Company:

Sir Dorab Tata founded New India Assurance Company on 23rd July 1919. It has

1068 offices comprising of 26 regional offices, 393 divisional offices and 648

branches with more than 21,000 employees.It is one of the largest Non- Life

insurers in Afro- Asia and the first one to cross Rs. 5,000 crores of Gross

Premium. It has a global network expanding in countries like Japan, U.K., Middle

East, Fiji and Australia. Its international operations started in 1920 and have

spread across 24 countries having a network of 19 branches, 12 agencies, 2

associate companies and 2 subsidiary companies. The company contributes 80%

of total overseas premium in India.The company has a highly qualified staff,

which excel in both expertise and knowledge and are trained to provide

satisfaction to the customers. It is the only company able to establish strong

relationships overseas and has a record of successful trading outside India. The

performance has been outstanding and the company has been able to maintain a

strong position in the market.

It has been the pioneer in various fields such as:

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Setting up an Aviation Insurance Department in 1946.

Handling the complete insurance requirements of the Indian Shipping

Fleet.

Introduced its own Training School.

Pioneering the concept of 'Model Office Training'.

Creating department in Engineering insurance.

Satellite insurance.

The company wants to develop itself as the best general insurance company in the

industry. It is concerned about the society and community, and provides financial

security at reasonable prices. The company gives utmost importance to customer

needs and there is transparency in its operations. Some of the policies and

schemes introduced by the company are:

Public Liability Policy

Jewellers Block Policy

Pravasi Bharatiya Bima Yojana Policy

Universal Health Insurance Scheme

Fire Policy

8. IFFCO Tokio General Insurance:

IFFCO Tokio General Insurance is a customer-centric company aiming to be

easily accessible and approachable to all sections of society. It offers products

and services that provide quality at reasonable cost. The organization has the

deep knowledge of IFFCO and thus developed a business plan that has both

stability and integrity.

It has set global standards for itself and is the only private general insurance

company in India to make 5 consecutive years of experience. ITGI has been

one of the few companies to show underwriting profits within four years of

operations.The company focuses on delivering creative solutions to its

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GROUP INSURANCE

customers. IFFCO Tokio General Insurance has 273 employees present in 68

cities, dedicated to give full satisfaction to the customers. It is the first

company to underwrite mega policies for a fertilizer and automobile client.

9. The Oriental Insurance Company Ltd.:

The Oriental Insurance Company Ltd. (OICL) is one of the general insurance

companies under the support of the General Insurance Corporation (GIC) of

India. It came into existence in the year 1947 and is one of the oldest

organizations in India. It caters to all sections and sectors ranging from MNCs

to rural sector. The headquarters of the company are situated at Delhi and it

has 21 Regional Offices, 311 Divisional Offices and 635 Branch offices.

It has a team of hard working employees, having the talent to take the

company to new heights. Also the company shows concern for both the

employees and customers. It provides special covers for large projects like

power plants, steel plants and chemical plants.

It believes in actively participating in economic growth by being a dynamic

organization catering to the society with full commitment and efficiency. The

main objectives of the company are to serve the insurance needs of the entire

community, provide services at reasonable cost, make optimum utilization of

the funds, maintaining global standards, minimization of losses and retention

of business.

10. HDFC Standard Life Insurance Company Limited:

HDFC Standard Life Insurance Company Limited is one of the first

companies to be licensed by IRDA to operate in the Insurance sector. The

company came into existence on 14th August 2000. Both Crisil and ICRA

have honored it with AAA Ratings. Similarly Moody's and Standard and

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Poors have also honoured it AAA ratings. HDFC holds 81.4% share in HDFC

and the remaining 18.6% stake is with Standard Life. It integrates the strong

expertise and stability of Standard Life and HDFC.

It is one of the most trusted companies; it is easily accessible and

approachable, offering value services to its customers.

The company aims to provide:

Innovative products to cater to different needs of different customers

Customer service of the highest order

Use of technology to improve service standards

Value for money for customers

Increasing market share

Professionalism in carrying out business

The values ingrained in the company are to provide financial security to

policyholders, maintain trust and keep innovating to establish it as a unique

player.

RECOMMENDATION

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The insurance company should now trying to identify the gap between current

level of customer services & customer expectation some of the strategies being

recommended are as follows;

1. Product differentiation: Offering a product that

I is distinctly different from other product available j

in market.

2. Innovativeness: Identifying means of a delightful customer experience,

3. Riders: These are additional the main product,

4. Flexibility: The company product flexible for the convenience of their

customer.

5. Hassle free services: All customer interaction should be eliminated.

6. Proper policy documentation: Wrong interpretation non-awareness of

policy documents by the customer may have serious implication the long term &

the possibility of the same should be alternated by the insurance company.

CONCLUSION

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This project was a great experience for me I really learnt a lot of things from this

project. This project gave us the knowledge and information about GROUP

INSURANCE

I have found,

Group insurance is an insurance that covers a group of people, usually

who are the members of societies, employees of a common employer, or

professionals in a common group.

Group coverage can help reduce the problem of adverse selection by

creating a pool of people eligible to purchase insurance who belong to the

group for reasons other than for the purposes of obtaining insurance.

A feature which is sometimes common in group insurance is that

the premium cost on an individual may not be risk-based.

Another distinctive feature is that under group

coverage, a member of the group is generally eligible to purchase or

renew coverage all whilst he or is a member of the group subject to certain

conditions.

Group health insurance is an insurance policy that provides health

coverage for a group of people. Here instead of an individual poiicy,

people to enrol! in a group plan to get health insurance coverage.

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GROUP INSURANCE

Provide more economical coverage because of mass purchase and group

discounting. Group insurance is arranged by the Association and only

requires payment to enroll.

Provide for larger amounts of life insurance and the right to convert life

insurance for each member in the association within 60 days of

termination.

Group life insurance gives you very little control over

the conditions of the coverage.

LIC offers life insurance protection under group policies to various groups

such as employees, professionals, co-operatives, weaker sections of

society, etc. The main features of the schemes are low premium simple

insurability condition and easy administration.

The Group Supperannuation scheme is designed to provide pension to

employees on their retirement from service.

Few employers have introduced voluntary retirement scheme (VRS) in

their establishments for the benefit of their employees.

Group Insurance refers to the policy taken on the lives usually of the

employees of a business concern. A' policy is taken for insuring a group of

people generally employees.

BIBLIOGRAPHY

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GROUP INSURANCE

Text Book: LIC of India Author: Sumninder Kaur Bawa

Text Book: Insurance Law & Practices Author: Madhu

Tyagi & C.L.Tyagi

Text Book: Modern Concept of Insurance Author:

M.N.Sharma

Text Book: Insurance Operation

Author: Institute of Certified Risk & Insurance

Managers (ICRIM)

WEBLIOGRAPHY

www.iicofindia.com

www.iciciprudentiai.com

www.newresuitsinqroupinsurance.com

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