Keyman Term Life Insurance in India by Mahavir Chopra

Keyman Term Life Insurance in India by Mahavir Chopra

News and Reviews exclusive: Wondering what will happen to your flourishing business when the ‘keyman’ — either you or your director or some key persons who, on account of their specialized, skills, foresight and business acumen, bring greater revenues, profits, brand-value to the organization is no longer there. Certainly, the sudden departure of key professionals from a growing organization can have a negative impact on its future prospects. A Keyman Insurance can be described as an insurance policy taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of the member of the business specified on the policy. Click to read on …

How Keyman Insurance works?

A company purchases a term life insurance policy on the key employee, pays the premium and is the beneficiary of the policy. If that person dies unexpectedly, the company receives the insurance payoff. A keyman insurance policy helps the company survive the blow of losing people who make business happen.

Who can be a Keyman Life Insurance?

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

- Directors of a Company

- Key Sales People

- Key Project Managers

- People with Specific Skills

Tax Implications - for Employer

A Company buying key man insurance for its employee can claim a deduction for the premium paid for the policy as a business expense under Section 37(1) of the Income Tax Act. The Claim amount received by the company, however, is completely taxable.

Tax implications - for Employee

The Company also has the option to assign or endorse the insurance policy in favor of the key employee (keyman) who has been insured under the keyman insurance policy. If such an assignment happens when the keyman is an employee of the company or at the time of retirement, the surrender value of the policy at the time of assignment is taxable in the hands of the keyman as “profits in lieu of salary” and taxable at the applicable tax rate. The maximum marginal rate of tax in the hands of individuals is 33.99%. Where no employer-employee relationship exists at the time of an assignment, such surrender value or any other payment is taxable as “income from other sources” in the hands of the keyman. The tax incidence is the same as above. The CBDT circular, which provides guidelines in respect of taxability of amount received under keyman insurance policy, does not, however, provide any guidance on tax implications in the hands of the keyman when he finally receives money from the insurance company.

To get our customized ONE PAGE Comparative Quotes, Please provide the following information and attach a sheet with detailed list of employees, with date of birth and coverage required and send it to us at info@insurancebrokerindia.com

a. Your Name

b. Your Designation

c. Name of Organization

d. Locatione. Phone

f. How many key employees do you want to cover?

By

Mahavir Chopra

CEO - Bonsai Insurance Broking

Mahavir@InsuranceMall.in

Insurance Online - http://www.insurancemall.in/

Corporate Insurance - http://www.insurnacebrokerindia.com/

Tags: bajaj allianz life insurance, bonsai insurance broking, ceo - bonsai group, icici prudential life insurance, indian insurance, insurance broker india, insurance mall, keyman insurance, lic, life insurance companies in india, life insurance in india, mahavir chopra, news and reviews, om kotak life insurance, online insurance, tata-aig life insurance, top insurance agent, types of life insurance

Keyman Term Life Insurance in India by Mahavir Chopra

Keyman Term Life Insurance in India by Mahavir Chopra

News and Reviews exclusive: Wondering what will happen to your flourishing business when the ‘keyman’ — either you or your director or some key persons who, on account of their specialized, skills, foresight and business acumen, bring greater revenues, profits, brand-value to the organization is no longer there. Certainly, the sudden departure of key professionals from a growing organization can have a negative impact on its future prospects. A Keyman Insurance can be described as an insurance policy taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of the member of the business specified on the policy. Click to read on …

How Keyman Insurance works?

A company purchases a term life insurance policy on the key employee, pays the premium and is the beneficiary of the policy. If that person dies unexpectedly, the company receives the insurance payoff. A keyman insurance policy helps the company survive the blow of losing people who make business happen.

Who can be a Keyman Life Insurance?

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

- Directors of a Company

- Key Sales People

- Key Project Managers

- People with Specific Skills

Tax Implications - for Employer

A Company buying key man insurance for its employee can claim a deduction for the premium paid for the policy as a business expense under Section 37(1) of the Income Tax Act. The Claim amount received by the company, however, is completely taxable.

Tax implications - for Employee

The Company also has the option to assign or endorse the insurance policy in favor of the key employee (keyman) who has been insured under the keyman insurance policy. If such an assignment happens when the keyman is an employee of the company or at the time of retirement, the surrender value of the policy at the time of assignment is taxable in the hands of the keyman as “profits in lieu of salary” and taxable at the applicable tax rate. The maximum marginal rate of tax in the hands of individuals is 33.99%. Where no employer-employee relationship exists at the time of an assignment, such surrender value or any other payment is taxable as “income from other sources” in the hands of the keyman. The tax incidence is the same as above. The CBDT circular, which provides guidelines in respect of taxability of amount received under keyman insurance policy, does not, however, provide any guidance on tax implications in the hands of the keyman when he finally receives money from the insurance company.

To get our customized ONE PAGE Comparative Quotes, Please provide the following information and attach a sheet with detailed list of employees, with date of birth and coverage required and send it to us at info@insurancebrokerindia.com

a. Your Name

b. Your Designation

c. Name of Organization

d. Locatione. Phone

f. How many key employees do you want to cover?

By

Mahavir Chopra

CEO - Bonsai Insurance Broking

Mahavir@InsuranceMall.in

Insurance Online - http://www.insurancemall.in/

Corporate Insurance - http://www.insurnacebrokerindia.com/

Tags: bajaj allianz life insurance, bonsai insurance broking, ceo - bonsai group, icici prudential life insurance, indian insurance, insurance broker india, insurance mall, keyman insurance, lic, life insurance companies in india, life insurance in india, mahavir chopra, news and reviews, om kotak life insurance, online insurance, tata-aig life insurance, top insurance agent, types of life insurance

Investment limits in Indian Insurance shall be raised to 49% now

Investment limits in Indian Insurance shall be raised to 49% now



News and Reviews : Finally the long awaited reform on Insurance Sector is coming its age. The financial liberalization which was initiated by Govt. of India in 90’s, led to opening up the Insurance Industry in 2001, is all set to see the Foreign Direct Investment (FDI) limits rising to 49% from the existing 26% limits. “This is a great news for the industry” says Mr Mahavir Chopra – CEO, Bonsai Insurance Broking. “Not only this will help existing Insurance Companies to give more room to their International Partners but will also infuse much needed Capital & Know How in the System. The raise will also bring International Brokers and Risk Managers to Indian shore as they always wanted bigger share for the India Play. It is an irony that Congress Govt. is opening up this sector at the fag-end of their current rule and also at a time when International Financial Markets, particularly Insurance Giants are facing huge problems of Liquidity and Investor Confidence in their countries i.e. Allianz (Germany) / AIG (USA)/ Hartford (USA) / MetLife? (USA) / Prudential (UK) etc. Nonetheless, we feel that it the right-move in the right direction which should have been charted long ago. Indian Insurance is close to USD 20.00 billion market with fairly healthy growth so far. The largest share comes from Life Insurance where LIC (Govt. Company) has a majority stake. “With 49% as new FDI limits, we will see consolidation and acquisition in the Indian Insurance Brokerage segment too”, says Mr Chopra. Click to read on …

‘The union cabinet today gave its approval for introduction of the Insurance (Amendment) Bill 2008 for amendment to Insurance Act, 1938, General Insurance Business (Nationalization) Act, 1972 and Insurance Regulatory and Development Authority Act (IRDA), 1999 in the Rajya Sabha in the basis of the recommendations made by a GoM (group of ministers),’ Chidambaram said. These bills will enable the raising of the FDI cap among private players from 26 percent to 49 percent, he added.

Through another bill, the equity of the state-owned Life Insurance Corporation LIC) will be raised from Rs.50 million to Rs.1 billion, Finance Minister P. Chidambaram told reporters after a cabinet meeting chaired by Prime Minister Manmohan Singh. This bill will raise the equity of the LIC from Rs.50 million to Rs.1 billion.

‘The amendments will remove archaic and redundant provisions in the legislations and incorporate certain provisions to provide IRDA with flexibility to discharge.

Clients cheer as insurance gets the Net edge - Economic Times

Economic Times News

MUMBAI: The benefits of de-tariffing in non-life insurance is finally trickling down to individuals. Insurance brokers have started providing aggregations services, offering quotes across a range of insurance companies to retail buyers of property, auto or health insurance. The key difference between a broker and an insurance agent is that unlike an agent, who pushes products for an insurance company, the brokers represent the customer and are expected to get their clients the best deals from across companies.

So far, insurance brokers had been constrained by regulations that required that any person selling insurance be a fully-qualified insurance person. Also, brokers were not allowed to have sub-brokers’ selling insurance. As a result of these restrictions, brokers focused only on high-networth corporate customers. Corporates made the best of de-tariffing by playing up one insurance company against the other.

But now insurance brokers have found out that by leveraging the power of the internet, they can aggregate quotes from across companies and offer the best rates to individuals. Insurance broking firms Optima Risk Management and Bonsai Insurance Broking services have managed to tie up with insurance companies, allowing buyers to purchase cover directly over the internet. Optima offers quotes through its website click2insure.com while Bonsai’s site is http://www.insurancemall.in/.

For the consumer, what this means is s/he can purchase the cheapest health or auto insurance online in the same way s/he compares and buys air tickets online. Another silent revolution that has made this possible is the outsourcing of claims servicing by insurance companies. Both in health as well as motor insurance, companies are offering cashless servicing of claim servicing through tie-up with either third-party administrators or auto dealers.

“Involvement of the branch has gone down drastically. The location of the branch, therefore, does not matter for the customer,” said Optima Risk Management MD Rahul Aggarwal. But the cashless service has not evolved to the extent that policyholders can get service from across service providers. This means that if either the car is repaired at a not-networked workshop or the policyholder is hospitalised outside the TPA network, the documents will have to be forwarded to the policy issuing officer for reimbursement.

According to Mr Aggarwal, after the purchase, the buyer can get the receipt and proof of insurance through email almost immediately. The brokers are also able to extend the benefit of no-claim bonus based on proof of no-claim, either in the form of a renewal notice or through a letter issued by the insurer, who has issued the expiring policy.

Mr Aggarwal anticipates retail business to get much bigger than corporate business. He expects to generate a premium of Rs 500 crore from a 10-lakh customer base in the next three to five years.

With auto and health insurance dominating the non-life market and private life insurance almost doubling every year, international insurers have also started showing interest in retail. Howden India, an affiliate of the UK-based Hyperion group, has shown interest in distributing life insurance products for multiple companies in India.

ET News Link - http://economictimes.indiatimes.com/Personal_Finance/Insurance/Clients_cheer_as_insurance_gets_the_Net_edge/articleshow/3044588.cms

Health Insurance in America

OK… In the series of my writings on Insurance and particular Health Insurance, I feel like dwelling more for the benefit of 6.00 Million Indian Americans residing in United States. Here it goes…

Amongst the expenses for Americans, Health cost could be easily adjusted as top 3 monthly expenses after Mortgage (Rent) and Food. For lucky ones who get the Health Cover from their employer, the cost may not exist, but for the Self Employed / Students or Retirees, the cost is un-bearable and growing year on year. I am sure, India is no different now, but still health cost is not as expensive as in America. It will not be an aberration to mention that falling sick without medical Insurance in United States is a sin, thus every resident as well as visitor to this country must ensure that he or she is adequately covered. The bad news is that over 40 million resident Americans are not even having a basic cover.

Even someone having a Health Card (Insurance), one may not really know what is covered or not, unless one has read the Policy fine prints on Inclusions or Exclusion. A simple common exclusion could be Ambulance charge. Thus the thumb rule is that any thing less than USD 500K Comprehensive Coverage for a family of 4 will fall short in case of medical emergencies. You are in better position, incase you are part of the Group Health Plan purchased by your company. Higher the members in your plan, better you are in terms of coverage and inclusions.

Individual or Family Health Insurance holder may not get the renewal, if the claims were high last year. To protect millions, Lawmakers in several American states are limiting insurers' ability to cancel health policies for consumers who buy their own coverage. It is been reported that over 18 million people have individual or family coverage in United States.

Unlike group health policies offered by employers, individual plan may require applicants to submit many years' worth of detailed medical information. The insurers use that information in deciding whether to offer coverage and how much to charge. Most states allow insurers to revoke an individual policy — generally within two years (called contestable period in Insurance parlance) of granting it — if they find an applicant lied or inadvertently omitted information on an application. Cancellation of a policy is retroactive. Patients must pay for all their past medical care, even if the insurer previously approved and paid for the care. There is little nationwide data on the extent of cancellations.

Prompted by numerous consumer complaints and lawsuits against insurers, state lawmakers are finally taking some action. Worth mentioning are :

• New Mexico : The Legislature this month passed bills requiring insurers to show that applicants deliberately gave incorrect information on an application. Current law allows cancellation if the error or omission was inadvertent.

• Connecticut : In October, a new law took effect requiring approval from the state insurance commissioner before an insurer can cancel an existing policy.

• California : Legislation introduced last week would require insurers who want to cancel a policy to first win approval from the state's Department of Managed Health Care. Last year, legislators adopted a law requiring insurers to pay for any medical treatment they approve, even if they later cancel the policy. California state regulators have announced cancellation-related fines against some insurers, including Blue Cross, Kaiser Permanente and Blue Shield of California.

• New York : The Governor Eliot Spitzer may come out with some limiting clause soon.

Insurance companies argue that only a small percentage of policies are cancelled vis-à-vis the live policies. They say the action is necessary to protect against fraud, such covering up medical conditions. "To the extent that applicants aren't honest and forthright about their health care status, that means costs are shifted to everyone else," says Karen Ignagni, president of the industry lobbying group America's Health Insurance Plans. I kind of agree with this argument. USA Today reports that Blue Cross of California has said it cancels less 1% of all new policies.
This debate will go on but fact of the matter is that Insurance in America is expensive. It is expensive because managing Health Care (Doctors / Medicines & Infrastructure) is really expensive out here.

Fortunately for Indians in America (Non Citizens only) or any where in the world, one can buy less expensive American Health Insurance from http://USA.InsuranceMall.in (Click Visitors Health). There is no medical test required and the Health Card could be printed On-line today. The (Visitor)Health Insurance Plan is created exclusively for non Americans and is cheaper vis-à-vis American Health Insurance for Americans. It could be a good Health Policy for you if you are H1 / L1 / F1 / J1 and Green Card Visa Holder in United States.

Cheers. Enjoy and Stay safe.

Manish Jaiswal
CEO – Bonsai America, Inc.
http://usa.insurancemall.in/


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Link - http://www.buynowindia.com/newsandreviews/index.php/Insurance/