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Group Endowment Insurance Scheme
Group Endowment Insurance Scheme
Group Endowment Scheme is a unique saving and protection scheme through which the employees of an employer can enjoy insurance protection throughout their service and also get a lump sum cash amount upon their retirement if they survive upto retirement.
What Need Does It Fulfill?
n Pakistan most employers do not operate any pension scheme for their employees although some employers may have a provident fund scheme or a gratuity scheme. The expected benefits at retirement under a typical provident fund scheme and gratuity scheme combined are woefully inadequate for a retiring employee for maintaining his standard of living after retirement unless he supplements these benefits with his own personal savings. Keeping this in view some employers may wish to encourage a habit of saving amongst their employees for their own welfare. Group Endowment Insurance Scheme can be a means of introducing a compulsory saving scheme for the employees under the sponsorship of the employer. Participation in the scheme is usually compulsory. However, if participation in the scheme is voluntary, at least 75% of eligible employees must participate.
Benefits Of Group Endowment Insurance Scheme
Under this scheme each employee is provided insurance protection for an amount which may be flat or depends upon the designation or salary of the employee. The amount of insurance is payable on maturity or death if it occurs earlier. In most cases the term of the endowment insurance for each employee is determined in such a way that the policy matures at or near his retirement date.
This enables the maturity proceeds to coincide with retirement and supplement the retirement benefits
1. Profit Participation
The endowment insurance is issued on a with profits basis. The same bonus rate are applicable as for the corresponding individual endowment insurance policies.
2. Premium Rates
The same premium rates are applicable as for individual endowment policy but with the added attraction that in group form some volume discounts are also applicable depending upon the size of the annual premium.
3. Surrender Value
The policy acquires Surrender Value in respect of a member after insurance cover has been inforce for at least two years on that member and no premiums are in default.
4. Loan Facility
Under this scheme if the member needs immediate liquidity and a policy has acquired Surrender Value in respect of member, he/she can avail a maximum loan of 80% of the net surrender value of the policy.
5. Continuation Priviliges
If an employee leaves the service of the employer, he can surrender his policy against the Net Surrender Value. He is also provided with the option of continuing his endowment insurance coverage in an individual capacity without any evidence of good health, for the same sum assured and term as he was enjoying during his service. The premium rates applicable to the policy are the same as are generally applicable to the same class of business in and individual capacity.
What riders can be added?
The ADB, PTD (Accident) and NDB can be added to this policy if desired.
This plan is suitable for employers who desire to inculcate a habit of saving amongst their employees in addition to providing them insurance against premature death.