Gratuity is not just a statutory obligation but also a very important tool today to retain and attract talented employees. A comprehensive and effective gratuity plan can reduce your business cost and corporate tax. At Kotak Life Insurance, we understand this. We have therefore designed a gratuity management solution that not only manages your retirement liability effectively but also helps you release resources for your core business activities.

Key Highlights of Kotak Gratuity Grouplan (KGGP):

• Market-linked returns and long term investment growth (Unit-Linked Non-Participating Scheme)
• Choice of eight investment fund options
• Switching facility amongst the available funds
• An in-built life cover (flat cover of minimum Rs. 1,000 per member or equivalent to Future Service Gratuity) that insures your employees’ lives and provides security to their families
• Critical Illness cover at half of accelerated additional death cover at a nominal cost

Who can opt for KGGP?

• Employer- employee groups that fall under the purview of Payment of Gratuity Act, 1972.
• Minimum group size: 10 members
• Minimum entry age: 18 years
• Maximum cover age: Retirement age as specified in the Trust Rules of the employer or 65 years whichever is lower

How does KGGP help me as an employer?

• Contribution to an approved gratuity fund is deductible under section 36(1) (v) of the Income Tax Act, 1961.
• Income earned from investments by an approved gratuity fund is tax-exempt under section 10(25) (iv) of the Income Tax Act, 1961.

How does KGGP help my employees?

• The gratuity settlement for retirement/resignation/withdrawal (as the case may be) will be settled as per the Trust Rules. Gratuity receipts are tax-exempt in the hands of the employee up to the limit of Rs. 3, 50,000 under section 10 (10) of the Income Tax Act, 1961.
• The death benefit will be equal to Future Service Gratuity or a flat cover (as agreed by the employer) plus gratuity settlement as per the Trust Rules. Death benefits payable to the employee are exempt from tax.
• In the event of Critical Illness, a benefit equal to rider amount, if opted will be paid. The death benefit for the remaining term to retirement will be reduced by the rider benefit paid.

What are the other Services to look for?

• Switching facility between different fund options free of charge
• Facility to pay the gratuity contribution in installments
• Annual Statement of Account with monthly newsletter
• Daily disclosure of Net Asset Value (NAV) of units
• Life cover is available 24 hours a day, 7 days a week, anywhere in the world

How will the contributions be made?
Fresh contributions may be made into the plan at the employer’s convenience. At the end of the year, the contribution payable will be determined on the basis of the accumulated asset value and the actuarial valuation.

The premium for life cover (compulsory) and critical illness cover (if selected) is payable annually in advance.

How are the investments managed?

• The contributions received will be allocated to each fund in accordance with the trustees’/employer’s instructions at the prevailing NAV of the units. The unit prices of each fund are based on the market value of the assets in the unit fund.
• The trustees/employer can switch from one fund to another. Units are sold and bought at prevailing NAV applicable for respective investment funds.
• The trustees/employers can monitor the performance of the selected funds on a daily basis on our website www.kotaklifeinsurance.com. The asset allocation of the funds is as follows:

Note: The aggregate exposure across the portfolios selected by the clients to equities should not exceed 60% of the total market value and to cash (money market instruments) should not exceed 20%.

Investment Management Philosophy:
Kotak Group’s investment philosophy works on the principles of transparency, flexibility and well-defined investment portfolios.

Unit Allocation:
Allocation of contribution to each fund would be done on a unitized basis as per the prevailing IRDA guidelines.

Calculation of Net Asset Value (NAV):
(Market Value of investment held by the fund +/- the expenses incurred in the purchase/sale of assets + value of Current Assets + any accrued income net of fund management charges – value of Current Liabilities- Provisions) divided by (Number of units existing at the valuation date)

The risk profile of different asset classes is as under.

Fund Management Charges:
Fund management charges vary depending on the fund size and the investment option chosen as indicated by the employer. These charges may be reviewed from time to time, up to a maximum of 2% of funds under management, with prior approval from IRDA.

Surrender Charges:
In case the policyholder wants to terminate/surrender the policy, a surrender charge is applicable depending upon the duration of the fund. In case a policy is surrendered in the first policy year, the company will charge 2% of fund value as surrender charge while the charge would be 1% of the fund value if the policy is surrendered in the second policy year. No surrender charge will be levied if the surrender occurs after completion of two policy years.

Switching Charges:
Kotak Life Insurance’s Group Gratuity Plan doesn’t levy any fee for switching between fund options. Thus the employer/trustees have the flexibility to reallocate their portfolios an unlimited number of times without incurring additional charges.

Mortality & Rider Benefit Charges:
The mortality charges and Critical Illness Benefit charges are taken separately from the policyholder.

Non forfeiture Benefits:
If the employer / trustees stop paying the contributions, the existing monies will continue to remain invested in the respective funds. The usual fund management charges will continue to be deducted. If any member retires / dies / withdraws, the cash value of the units held on his behalf will become payable in the manner provided for in the rules of the scheme.

The employer may pay the current as well as the arrears of contributions at any time. The monies paid will be applied to purchase units in the funds chosen by the employer / trustees at the NAV. No handling charges will apply.

In case of retirement / withdrawal, proportionate gratuity for the service up to the period for which contributions were received & funding made would be payable. On death, if death cover is maintained out of surplus, additional death benefit be payable.

Contribution may be resumed any time according to funding rates determined by an actuarial valuation

Termination of Policy:
The policy and/or the benefit in respect of any member can be terminated at the sole discretion of the company, if the value of the units is not sufficient to meet any charges, taxes or expenses, or if it is found that the member data provided was inaccurate or there was any material suppression of member data within the provisions of Section 45 of Insurance Act, 1938.

Free Look Period:
The policyholder is offered 15 days free look period from the date of receipt of the policy.

Insurance Ombudsman:
The company shall endeavour to promptly and effectively address Policyholder’s grievances. However, in case the Policyholder may not be satisfied with the response of the company, he/she may also approach the Insurance Ombudsman located in his/her region. Details of the offices of the Ombudsman across the country are made available on the website of the company at www.kotaklifeinsurance.com and will also be made available to the Policyholder on request.

Risk Factors:

• Unit Linked Life Insurance products are different from traditional insurance products and are subject to risk factors.
• The premium paid in Unit Linked Life Insurance policies are subject to investment risk associated with capital markets and the NAVs of the units may go up or down based on the performance of the fund and factors influencing the capital market and insured is responsible for his/ her decisions.
• Kotak Mahindra Old Mutual Life Insurance Ltd. is only the name of the company and Kotak Gratuity Grouplan is only the name of the unit linked life insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns.
• Please know the associated risks and the applicable charges, from your insurance agent or the intermediary or policy document of the insurer.
• The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.
• The past performance of other plans of the Company is not necessarily indicative of the future performance of any of these funds.
• All benefits payable under the Policy are subject to the tax laws and other financial enactments, in force from time to time.

If currently you do not have a Group Gratuity plan, you can start one today with Kotak Life Insurance! If you have an existing Group Gratuity plan you can transfer your fund to Kotak Life Insurance. We will help you with all the necessary paperwork and guide you through the process to make it hassle-free.

Kotak Life assures you of a cost effective fund management for you and your employees’ benefit In a transparent and simplistic manner without any hidden costs!