In today’s competitive market scenario, it’s getting tougher to attract and retain customers, let alone aiming for market leadership. The Kotak Credit-Term Grouplan, is the right solution to your needs, protecting both your institution’s and your customer’s interest. Not only is it cost effective and easy to administer, but it also gives you a differentiating edge over your competitors.

What does the Kotak Credit-Term Grouplan offer?
This plan provides life cover to a group of borrowers of the credit institution (banks, retail finance providers etc.) with the Life Assured being the borrower and the Credit Institution being the beneficiary. It is a non-participating yearly renewable plan and can be customized to cover all types of loans and repayment terms. The plan can be compulsory (all members join) or voluntary (subject to certain conditions).

The plan can be compulsory (all members join) or voluntary (subject to certain conditions). In the unfortunate event of death of the borrower during the term of the policy, the outstanding loan amount would be repaid by Kotak Life Insurance, relieving the borrower’s family of the loan liability and eliminating risk of loss due to death of the borrower to the Credit Institution.

What are the advantages to me as a credit institution?

• Eliminates the risk of default in the event of death of the borrower
• Facilitates competitive pricing for credit products and ensures a differentiating edge over your competitors
• Significant opportunity to earn fee-income
• Does not require a Corporate Agency or Referral tie-ups
• Extremely cost-effective because of group pricing dynamics and premium recovered from the customer
• Hassle-free administrative procedures

What are the advantages to my borrowers?

• The borrower’s family is relieved of the financial burden of paying the outstanding loan amount
• The pooling of risk (group cover) allows the cover to be provided at a low cost
• Hassle-free and convenient documentation process
• Relaxed medical examination norms (subject to applicable conditions)
• The life cover is available 24 hours a day, 7 days a week, anywhere in the world

What are the eligibility requirements?

• The minimum age at entry is 18 years
• The maximum age at entry is 64 years
• The maximum ceasing age of the plan is 65 years

What happens in the event of death of a borrower?
In the event of death of a borrower during the term of the plan, a lump sum payment equal to the sum assured will be paid to the credit institution.

What is the maximum cover that a member can avail of?
The maximum cover allowed per member will vary from group to group up to a maximum of the original value of the loan.

In what ways can the cover be expressed?
The cover can be structured to meet the Credit Institution & borrower’s needs. Generally it is expressed in terms of Original Loan Amount or Outstanding Loan Amount on the date of death etc. The choice of cover will depend on the requirements of the credit institution, the cost constraints, the type of scheme and the data that can be provided.

How large can a group be?
Atleast 25% of the borrowers in the group should opt for the life cover subject to a minimum of 1250 members. Kotak Life Insurance provides the option of compulsory or voluntary membership for the borrowers of credit institution. There is no restriction on the maximum number.

What is the frequency of premium payment?
Generally, premiums are paid annually in advance. However, we also offer the flexibility to the credit institution to make the payments at half-yearly, quarterly or monthly intervals.

Are there any tax benefits?

• The premium paid by the credit institution could be considered as part of business expenses and may be tax deductible
• Any premium paid by a borrower in his/her capacity as an individual will be eligible for tax deduction under section 80(C) of the Income Tax Act, 1961
• Benefits received by the borrower’s nominee are tax free under section 10(10 D) of the Income Tax Act, 1961

When will the cover terminate?
The cover for a member will cease on the earliest of:

• The date on which the loan is repaid
• The date the borrower attains the ceasing age as in the policy contract
• The date of scheduled expiry of the loan as per loan contract
• The date on which the contract terminates as per the provisions of loan contract
• The date on which the premium for the member ceases

Are there any other benefits that can be included?
The credit institution can include the Accidental Disability Benefit value-add for a nominal additional premium. On such addition, if during the term of this benefit, a member is totally and permanently disabled as a result of an accident (subject to certain exclusions); a lump sum payment will be made to the credit institution. The maximum benefit allowed will be the lower of 3 times the annual salary or the Basic Sum Assured or Rs. 10,00,000.

What services can we expect?

• A dedicated Customer Relationship Manager for effective initiation and regular servicing
• Comprehensive operational and post-launch support from centralized Group Operations Team
• Centralized customer support for query handling on an ongoing basis