HDFC Life Group Variable Employee Benefit Plan

What is HDFC Life Group Variable Employee Benefit Plan?

The HDFC Life Group Variable Employee Benefit Plan is a non-linked, non-participating, pension plan designed to help manage employee benefits like gratuity, leave encashment, and superannuation. This investment plan provides a 1% guaranteed return on the account value at the beginning of each year, adjusted for cash flows. 

The HDFC Life Group Variable Employee Benefit Plan is a flexible investment option that lets employers offer customized benefits while ensuring transparency and compliance with tax rules under the Income Tax Act, 1961. It supports both individual member accounts and pooled funds, making it adaptable to the needs of different organizations.

Features of HDFC Life Group Variable Employee Benefit Plan

The key features of the HDFC Life Insurance Group Variable Employee Benefit Plan are listed below:

• Guaranteed Minimum Return: The policy gives a guaranteed return of 1% per year for the full term of the policy.
• Quarterly Interest Update: An additional interest rate is decided and announced at the start of every financial quarter.
• Tax Benefits: You and your employees can enjoy income tax benefits as per the current tax laws.
• Superannuation Scheme: You can choose an individual member-level account in the superannuation scheme.
• Assured Benefit: The assured benefit is a 1% annual return on the account value, which will be adjusted based on any cash flows during the year.

Eligibility for HDFC Life Group Variable Employee Benefit Plan

Benefits of HDFC Life Group Variable Employee Benefit Plan

The key benefits of buying the HDFC Life Group Variable Employee Benefit Plan are as follows:

• Interest Crediting: Interest rates are declared quarterly, based on yields from underlying funds. The gross and net yield difference is capped at 80 basis points, with expenses met from this difference.
• Additional Funding Options: Master policyholder can choose additional funding during the first policy year with the following options:
  • Option A: 3%
  • Option B: 2%
  • Option C: 1%
  NOTE: Additional funding is recovered through deductions from the account value.
• Benefits of Gratuity, Leave Encashment, and Other Employee Benefit Schemes:

  Event	Benefit Details
  Death of Scheme Member	Benefit as per employer’s scheme rules, up to the policy account value.
  Additional Benefit (Life Cover)	Extra Rs 10,000 per member if life cover is opted.
  Exit due to Termination, Resignation, or Early Retirement	Benefit as per employer’s scheme rules, up to the policy account value.
  Exit other than Normal Death	Benefit as per employer’s scheme rules, up to the policy account value.

• Benefits of Superannuation Schemes:

  Event	For Defined Benefit Schemes	For Defined Contribution Schemes
  Death of Scheme Member	Benefit as per employer’s scheme rules, up to the policy account value.	Benefit as per employer’s scheme rules, higher of: - Member’s account value - Assured benefit
  Exits due to Termination, Resignation, or Early Retirement	Benefit as per employer’s scheme rules, up to the policy account value.	Benefit as per employer’s scheme rules, up to the member’s account value.
  Exit Other Than Normal Death	Benefit as per employer’s scheme rules, up to the policy account value.	Benefit as per employer’s scheme rules, up to the member’s account value.

  Note: All benefits for a member cease once the relevant exit or death benefit is paid.

Policy Details of HDFC Life Group Variable Employee Benefit Plan

• Indefinite Term: The master policy has no specified maturity/vesting date and continues indefinitely. The annuitization of benefits follows the employer's scheme rules.
• Multiple Insurer Option: If the Master Policyholder maintains superannuation funds with more than one insurer, they can choose the insurer to purchase the immediate annuity.
• Mortality Charge: A charge of Re 1 per 1000 of sum assured will be deducted for mortality. Any taxes or levies will be added as per the current rates.
• Benefits on Surrender: If member accounts are maintained, the surrender benefit will be the policy’s account value, with no charge. If no accounts are maintained, the surrender benefit will be the total account value of all members, with no charge.
• Cancellation in the Free-Look Period: If you are not satisfied with the policy, you can return it within 30 days for cancellation. You will get a refund after deducting the risk premium, medical expenses, and stamp duty.
• Eligibility: Members must be between 16 and 75 years of age. The policy term must be at least 1 year. It is renewable annually. A minimum of 10 members and Rs 500,000 premium are required.
• Terms & Conditions: The policy renews annually. The master policyholder manages the scheme, and new members can join on specified dates. The policy continues unless cancelled by the master policyholder or insurer.
• Alterations: You can change the vesting date as per the scheme rules, for example, if the employer increases the retirement age.
• Assured Benefit: If no member accounts are maintained, the assured benefit will apply to the entire superannuation fund.
• Grace Period for Non-Forfeiture Provisions: Since it is a single premium policy, there is no grace period.

How the Plan Works?

Learn the workings of the HDFC Life Group Variable Employee Benefit Plan from the following steps:

• Policy Structure: A group insurance plan managed under a master policy, where the employer or trustee acts as the master policyholder.
• Premium & Renewal: The employer pays the premiums, and the policy is renewable annually. It continues indefinitely unless cancelled by the insurer or master policyholder.
• Investment Component: Premiums are invested in variable funds, offering potential growth based on market performance.
• Surrender & Benefits: Surrender benefits are based on the account value of each member, with no surrender charges. Death or disability benefits are also provided.
• Tax Benefits: Tax benefits may apply as per current tax laws. Consult a tax advisor for more details.

Suicide Exclusion Criteria

The suicide exclusion does not apply in the HDFC Life Group Variable Employee Benefit Plan. This means that if the policyholder dies by suicide within one year from the date the coverage starts or the entry date, the full death benefit will be paid.