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When the sum secured by the policy becomes payable, it shall under special
trustees are usually appointed to receive and holds the same be paid to the
Official Trustee of the State in which the office at which the insurance was
effected is situated, and shall be received and held by him upon the trusts
Expressed in the policy, or such of them as are then Existing.
Only wife and /or children of the assured may be appointed beneficiaries under
the policy taken under this Act. If any other relative is named beneficiary, the
policy will not come under the purview of this act.
Such policy cannot be attached for the dues of the creditors , however if it is
proved that such policy is taken to defraud the creditors then proceeds out of
such policy will be permitted to be paid.
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Any married man can book any policy under this act.
Any High Net worth Individual who wants to protect and secure
future of his wife and children.
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HUF is a Family arrangement where members derive benefits which they may
not be contributing towards
If not created earlier, one can create HUF only by one¶s self acquired property,
but it shall not be ancestral property for the first time.
HUF consists of all male members lineally descended from a common
ancestor and include their wives and unmarried daughters.
&&
Any adult coparcener can be the karta i.e.; Manager of the HUF.All male
lineal descendents of a common male ancestor will be called coparceners.
Coparceners have special rights.
Wife of karta and all other female members (wives and daughters¶ of
coparceners) become members of the HUF.
Female members cannot be coparceners and cannot become the Karta.
However a minor can act as a karta of HUF through his natural guardian (his
mother) where the karta (father) dies.
Wife of the karta can become the karta only if all the male members are
deceased.
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The basic difference between the 0-)!. 0-)!. ( 0 9&(
.0 is that in the former the employee or his nominee is the
beneficiary whereas in the latter the beneficiary would be the Company.
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Employer contribution towards premium are tax free as business Expenses
under section (1) of the Income Tax Act , 1961
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Premiums paid are treated as perquisite in the hands of employee under
section 17(2) (v) of the Income Tax Act.
Maturity / death benefits will be tax free as per admissibility of section 10 (10D)
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These policies are to be treated at par with individual cover.
The requirements will be same as individual policies including consideration of
the Existing cover
Plans allowed - All plans allowed
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Letter from employer stating intention of buying such insurance on the lives
of named employees.
Audited Profit and Loss account of the company for the last three years.
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Drawing from above it is clear that, a partnership, firm has insurable interest in
the life of each of the partners to the extent of the amount of *(
! .= required to be paid in respect of the share of each partner.
Salient Features and requirements of Partnership Insurance:
Partnership Insurance must be considered on lives of all the partners. The
only exceptions can be that a particular partner is not eligible for insurance
due to ill health or advanced age.
The Deed of Partnership should contain a clause that the partnership is
revocable definitely in case of demise of a partner. There should be a definite
provision regarding withdrawals of capital on the demise of any of the partner.
³Not withstanding anything within mentioned to the contrary , it is hereby agreed
and declared that in the event of dissolution of the partnership firm for any reason
other than death of any of the partners insured under the policy, the within
mentioned policy shall be either.
1. Partnership deed*
2. Authority letter in favour of an employee or partner of the firm to transact
insurance on its behalf.
3. Audited Profit and Loss account of the Partnership firm for the last three years.
4. Individual partner¶s 3 years Income tax returns.
5. CV or brief information about each partner.
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A Key Person is a person who is a major driving force behind a business and
who is so unique and valuable in specific or all areas of the business that
without him/her being associated with the business, there would be a
substantial loss to the company¶s earning capacity.
-! !" . !
The death of a Key Person could cause a business to suffer many types of
losses as indicated in the following:.The loss of customers or sales attracted
by his / her ability and personality. >. The loss of his / her day to day specialized
abilities.?.The cost of recruiting and training a suitable replacement.
The delay or cancellation of any business or project upon which he /she is
working. . The loss of opportunities for future Expansion.;.The loss of
opportunities for future Expansion.A. The loss of stable management and good
labour relations.. The reduction of the credit standing of the company.
. Withdrawal of credit facilities by banks or other institutions.B. Recall of
Existing loans guaranteed by the Key Person. C. Refusal of suppliers to
deliver goods without prior payment. . Additional expenses in replacing the
key person
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The idea of Key Person insurance is to indemnify the company for these losses
and allow it to continue, as the same thriving concern that it was while the Key
Person was alive and working at least for a period till there is a replacement
arranged.
As the above losses and expenses are incurred by the company the benefit of
this policy remains with the company and not intended to be passed on to the
family or other beneficiaries of an individual.
As the concept of Key person is linked to the profit earning capacity of the
company, the maximum allowable sum assured under such policy is also
linked to the profits made by company.
Following guidelines to be observed while suggesting insurance cover on a
key person
A company is eligible for below mentioned amount towards total Sum Assured
under all key person policies bought or proposed by it.
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10 times of the total annual compensation package for the Key Person, this
includes salary, bonuses and all other perquisites (OR)
3 times the average gross profits for the company for the last 3 years (gross
profits means profit before tax and depreciation) (OR)
5 times the average net profit of the company for the last 3 years (NP is
generally profit after Tax and depreciation)
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