Group Insurance

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Published in Mint on, Dec 04 2012, Written by Kapil Mehta
My adviser has asked me to purchase a keyman insurance. What are the benefits?

Keyman is a term insurance that is purchased by a company on the life of its key personnel. If the key person dies, the death benefit is paid to the company. If you are a majority shareholder in the company, then purchasing keyman has several advantages. First, the entire premium is treated as an expense and is tax deductible. Second, the sum assured is linked to the company’s profitability and can be much higher than what you may be able to take in an individual capacity. Some insurance companies restrict keyman insurance for personnel having less than 75% shareholding.
I am 29 years old and have no dependants. But I want to buy a term insurance before I turn 30 as the premiums will go up after that. How do I buy online?

It is an excellent idea to purchase term insurance early. The prices are low and you are well covered for the future when you may have dependants. A few companies will offer online plans that cost less than Rs.8,000 per year for a 30-year cover of Rs.1 crore. In comparison, the offline term cover will cost 50% more.
The price difference between age 29 and 30 is small, so do not worry about that. It is more important to do your research thoroughly. Visit a good insurance information site that provide quote comparisons across insurers and, if required, help you through the purchase process.
I have a small company with 20 people. I want a group term life insurance for my employees. Please advise.

Most insurers provide group term life cover if the employee base is 50 or higher. However, a few insurers offer this even for groups as small as 10 people. Ask your insurance adviser to identify these companies and get you premium quotes.

The government may increase foreign direct investment (FDI) in insurance. Should I wait for that before purchasing a plan?

There will be a little short- to medium-term impact of an FDI increase on insurance products. So do not hold up an insurance purchase. Ensure that you purchase term insurance first. Term insurance rates in the market are already low and may not drop materially with new entrants or FDI hikes.
I want to get a Rs.5 lakh cover for my driver. What documentation is required?

Several companies will offer this amount of cover to your driver. You will need to provide age and address proofs, which could be the driver’s licence, along with an income proof. The income proof could be a letter from you stating the salary you pay him or a copy of the driver’s bank statement.
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