key man insurance.pptx

7/27/2019 Key Man Insurance.pptx

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What is Key man Insurance:

Key man insurance is taken by a business firm onthe life of key employee(s) to protect the firm against

financial losses, which may occur due to thepremature demise of the Key man.Key man insurance is also referred to as key personinsurance or keyemployee insurance.


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Anybody with specialized skills, whose loss can causea financial strain to the company are eligible for Keyman Insurance. For example, they could be:

Directors of a Company Key Sales Person

Key Project Managers

People with Specific Skills etc.


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The objective of key man Insurance is to protect thecompany from the adverse financial effect by the KeyEmployee or Key Directors death by making fundsavailable to the company in his absence. Thecompanys progress and profit, usually depends uponthe vital decision or technical expertise skill,knowledge, entrepreneurial vision of its Key Director

or Key Employee, particularly in this competitiveGlobalised marketing Environment.


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Today companies expansion diversification, andsetting up policy depends upon its far sighted vision,decision, technical know-how of the Key Directorand Key Employee and thats required to be secured

by purchasing Key man Insurance for makingfunds available for promoting, recruiting in theabsence of Key-man. This policy is specially

purchased by the company (both Pvt. and Ltd.Companies.) for the life of its most important Keyperson.


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Insulate the risk of financial loss against loss of a Keyman.

Premiums paid under key man insurance may be fully allowedas Business Expenses under Section 37(1) of the Income Tax

Act, 1961, subject to satisfaction of the assessing authority.

Interest on loans taken against a key man insurance policymay also be allowed as business expenses.

Premiums paid by the company on the life of a keyman wouldnot be treated as perquisites in the hands of such a keyman

when the companys request is accepted by the assessing

authority. Key man Insurance policy is a positive measure to improve

the retention of the key man in the company.


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The key man insurance (KMI) is allowed to theemployee, if he satisfies the following condition;

The keyman should hold less then 51% shares of

company. The total number of shares of the company held by

the keyman and his family should be less then 70%

The keyman should be literate.


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Key-mans qualification.

Experience in different fields.

Previous record and service period in theorganization.

Is he the only key-man in the specific field orotherwise?


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In case of S.B. is payable under the plans, will beconsidered as the business income of the company & will

be taxable under section 28 (vi) of the income tax ACT. Under section 31(1) of the income tax Act the premium

paid under key man insurance can be claimed bycorporate entities as bonafide business expenses.

If the policy has been assigned to the key man, the policy-proceeds including bonus will be taken as profit undersection 17 (clause) of the income tax Act.

If the director of the company is the assignee under thekey man policy, it will be taken as income from othersources and will be taxable according to the section 56(2ic) of the income tax Act.


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ANMOL JEEVAN-I Anmol Jeevan-I is a pure term cover provides only life cover

unlike endowment and money back policies which have a built-in savingelement too.

On Maturity no amount will be paid to the Policyholder.

On death of the Policyholder during policy term, S.A. will be paid to the nominee.

INCOME TAX REBATE

The premium paid towards Anmol Jeevan-I is eligible for tax deduction undersection 80C of the Income Tax Act,1961.


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ELIGIBILITY CONDITIONS AND RESTRICTION:-

Minimum Age at entry: 18 years (completed)

Maximum Age at entry: 55 years (nearest birthday)Maximum Age at maturity: 65 years (nearest birthday)

Policy Term: 5 years to 25 yearsMinimum Sum Assured: Rs.5,00,000/-Maximum Sum Assured: Less than 25,00,000 /-

EXAMPLE:-

Mr. LIC takes a policy for 20 years for Rs.20 lakh sum assured.(a) On survival till maturity, Mr. LIC will not receive any amount.(b) On death of Mr. LIC during policy term, his nominee will get Rs.20lakh S.A.


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Amulya Jeevan 1(Plan No. 190) is a Term Assuranceplan with minimum Sum Assured of Rs.25 lakh.

On Maturity no amount will be paid to the

Policyholder. On death of the Policyholder during policy term, S.A.

will be paid to the nominee, provided the policy iskept in force.

The premium paid towards Amulya Jeevan 1 iseligible for tax deduction under section 80C of theIncome Tax Act,1961.


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ELIGIBILITY CONDITIONS AND RESTRICTION:-

Minimum Age at entry: 18 years (completed)Maximum Age at entry: 60 years (nearest birthday)Maximum Age at maturity: 70 years (nearest birthday)Policy Term: 5 years to 35 yearsMinimum Sum Assured: Rs.25,00,000/-Maximum Sum Assured: No Upper Limit

Grace Period: 15 days

Example:

Mr. LIC takes a policy for 25 years for Rs.50 lakhs.(a) On survival till maturity, Mr. LIC will not receive any amount.(b) On death of Mr. LIC during policy term, his nominee will get Rs.50lakh S.A.


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PRODUCT FEATURES:- Minimum / Maximum Age at Entry : 18 Years to 60 Years

Term : 5 Years to 25 Years or Retirement age, whichever is earlier, choiceof Increasing Sum Assured @ 5% p.a. or Level Cover

Mode of Payment : Single Premium or Regular Premium (no monthlymode available)

Minimum (Per Life Assured):SBI Life - Shield Plan: Rs. 10, 00,000/-

Maximum Sum Assured (Per Corporate):No Maximum Sum Assured limit, however the quantum of cover would be

based on the following parameters, underwriting requirements and themaximum Sum Assured should be LOWER of :


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key man insurance.pptx

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