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 !" #$ "! m  "%& !" %" ' (%)$ *

‡ A policy of insurance under this Act effected by any married man on his own life ,
and Expressed on the face of it to be for the benefit of his wife or of his wife and
children , or any of them , shall ensure and be deemed to be a trust for the benefit
of his wife, or of his wife and children , or any of them , according to the interest so
Expressed , and shall not, so long as any object of the trust remains be subject to
the control of the husband, or to his creditors , or form part of his estate.

‡ When the sum secured by the policy becomes payable, it shall under special
trustees are usually appointed to receive and holds the same be paid to the
Official Trustee of the State in which the office at which the insurance was
effected is situated, and shall be received and held by him upon the trusts
Expressed in the policy, or such of them as are then Existing.

‡ Only wife and /or children of the assured may be appointed beneficiaries under
the policy taken under this Act. If any other relative is named beneficiary, the
policy will not come under the purview of this act.

‡ Such policy cannot be attached for the dues of the creditors , however if it is
proved that such policy is taken to defraud the creditors then proceeds out of
such policy will be permitted to be paid.

—

    




‡ !+&!#!!,-!)%.$  /
‡ Any married man can book any policy under this act.

‡ This category can not be applied on the existing policy.

‡ When ever an individual is purchasing any type of insurance policy

he can opt to have the MWPA clause added in his application form
by mentioning the same on the Form and can also submit addendum
attached to the form

‡ (!0(!)$ ))&( -!)%.&!/

‡ Business Man ± Proprietorship Company, Partners in a Partnership

Company, Directors of any Pvt. Ltd. And Ltd Company

‡ Any High Net worth Individual who wants to protect and secure
future of his wife and children.

2

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&( 
.- !" * 1%$ $%2%$ $0%).3 4
5!2  $#.&( %$+*
‡ HUF is a Family arrangement where members derive benefits which they may
not be contributing towards
‡ If not created earlier, one can create HUF only by one¶s self acquired property,
but it shall not be ancestral property for the first time.
‡ HUF consists of all male members lineally descended from a common
ancestor and include their wives and unmarried daughters.
 
&&
‡ Any adult coparcener can be the karta i.e.; Manager of the HUF.All male
lineal descendents of a common male ancestor will be called coparceners.
Coparceners have special rights.
‡ Wife of karta and all other female members (wives and daughters¶ of
coparceners) become members of the HUF.
‡ Female members cannot be coparceners and cannot become the Karta.
However a minor can act as a karta of HUF through his natural guardian (his
mother) where the karta (father) dies.
‡ Wife of the karta can become the karta only if all the male members are
deceased.


    V 


&( $ &%) )& $&! 

‡ When an unmarried daughter marries, she ceases to become a member of

her father¶s family and becomes a member of her husband¶s family.
‡ HUF may consist of a single male member and his wife, daughter and or
widows of deceased coparceners. There must be at least two members to
constitute it.
‡ Even if living alone in separate houses and engaged in separate business and
profession, members can enjoy the HUF status, they can also have an
independent property.
‡ They can bring their property in HUF only if they want to.
‡ Under Income Tax, the rates of HUF are the same as an Individual.
‡ Any policy bought by an HUF can be financed from the HUF¶s funds; in that
case the tax rebates are given to the HUF.
‡ Coparceners can quit the HUF and can ask for partition and their share,
members can¶t.
‡ If a coparcener leaves the HUF, his linear descendents also leave with him.
‡ Rights of dissolution are with the coparceners only.
‡ A coparcener cannot take the policy on the karta, he has to sign a proposal
form for himself, or in the addendum in case the HUF proposes him.
·

    V 


‡ No nomination is possible in HUF.

‡ Claims if any are payable to the HUF managed by the Karta
‡ ( !-  ) 2 &(  6( $! !&&, &( -!)%.+%&(
(%0*
( ,&%7&( -!)%.&!(%07%&0! &.
!%$ &%!! $ &( -!)%.$7%2 &( -! $&!
(%0(%( *
‡ Application under HUF must have karta of HUF as owner as such
policies are property of HUF.
‡ Life to be assured can be Karta himself, one of the coparceners or
members of HUF.
‡ Hence all proposals submitted under HUF must be signed by Karta as
owner of the policy. If the same is on the life of Karta he must sign the
proposal twice as owner and life assured.
%%) ,
‡ Multiple of 10 applied to the income of HUF to arrive at the amount up to
which an The total SA on the policies bought by HUF including the one
under consideration should not exceed 10 times the income of HUF.
‡ HUF Income Tax Returns must be signed by Karta.
‡ In case of coparcener or member of HUF being insured, Income proof of
the Life to be assured will also be required.
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!0 & 8% $4

1. Proposal form signed by Karta and LI (if major)

2. Income proof of HUF
3. Income proof of LI (if major & working)
4. HUF Addendum

 &!&( %(  &(& %&%!"%70 &&!&( 

!-   #.&"& !#&%%7&( 
 $ 2) 
+ 0, &&(%!-&%!"!!%7(%7( 
%2 &0 &%&( 0 !"&6!-   ! 2 
&(  0# 1%" 90% $7(& 3
! 
& & $!-  * &!&(%&(  !)$%2 &
(%7(- 0%0$$%"" &:)%#%)%&% *

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(&%0-)!. 0-)!. 
( 0 /

‡ Employers have an insurable interest in the lives of his employees. In view of

this, we can allow life insurance cover for employee where the premiums are
paid by the employer.
‡ This is however subject to our complete satisfaction about the absence of
moral hazard.
‡ An employer employee relationship would be established where
the employee earns a salary from the employer.
‡ The insurance policies can be taken for all employees or for a class of
employees. The employer may or may not be the proposer under the policy.

( 0% !"!&(  0-)!. &!(2 (% 0-)!. )%2 !2  $ 4

‡ As a reward for good service to a select band of employees.
‡ As an encouragement for continuation in the service
‡ As a welfare measure and provision for his old age / dependents.
‡ Many employers offer their employees, as part of their remuneration
package, benefits such as : %" !2 , %#%)%&.!0 6%&%)%)) 

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The basic difference between the 0-)!. 0-)!. 
( 0 9&( 
 .0 is that in the former the employee or his nominee is the
beneficiary whereas in the latter the beneficiary would be the Company.
- &( )& &7%$ )% #.%" !%)6-!)%.# % $$ 
&(%&.- !"% %"2!!" 0-)!. %"&(  0-)!. 6&!7 &( 
+%&((%"0%).$! !&!+0! &(;<!"&( #% *

( 0!&!00! 0-)!.  0-)!.  )&%!(%- 4

‡ A sole proprietorship as the employer where the employee (other than the
sole proprietor) is any employee of the sole proprietorship.
‡ A partnership firm as the employer where the employee (other than a partner)
is any employee of the partnership form.
‡ A corporate as the employer where the employee is any employee of the
corporate.
‡ Any other legal entity as the employer and its employees



      

( !-&%!2%)#) &!&(  0-)!.  4

‡ The employer is the proposer under the policy and assigns the policy at the
inception.
‡ The employer is the Proposer under the policy and retains the right to assign
the policy (deferred assignment).
‡ The employee is the proposer on his own life but the premiums have been paid
by the employer( third party cheque).

:0-)%&%!

!0-)!. 4
Employer contribution towards premium are tax free as business Expenses
under section (1) of the Income Tax Act , 1961

!0-)!. 4
Premiums paid are treated as perquisite in the hands of employee under
section 17(2) (v) of the Income Tax Act.

Maturity / death benefits will be tax free as per admissibility of section 10 (10D)



      
%%) 8% 0 &$ )%7%#%)%&.4
These policies are to be treated at par with individual cover.
The requirements will be same as individual policies including consideration of
the Existing cover
Plans allowed - All plans allowed
!0 & 8% $4

‡ Letter from employer stating intention of buying such insurance on the lives
of named employees.
‡ Audited Profit and Loss account of the company for the last three years.

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(&%& (%- $&(  $"!& (%- /

A partnership is a business jointly owned by several parties, but which is not

itself a corporate entity. In the Partnership Agreement it is generally provided
that in the event of death of any partner, the surviving partners will have the
option to purchase the deceased partners share in the firm. For this purpose,
the partnership firm should have sufficient funds available. Normally a firm will
put all its money into business rather than keep it idle for any eventualities.
Under such circumstances it is difficult to arrange huge funds to buy back a
partner¶s share in case of sudden death of one. Insurance is one way through
which such funds can be made available without delay or disturbing the capital
of the firm. Also it is an efficient way to manage the situation as the firm does
not have to keep liquid funds idle for such rare occasions.

Drawing from above it is clear that, a partnership, firm has insurable interest in
the life of each of the partners to the extent of the amount of *( 
! .= required to be paid in respect of the share of each partner.

—





Salient Features and requirements of Partnership Insurance:
‡ Partnership Insurance must be considered on lives of all the partners. The
only exceptions can be that a particular partner is not eligible for insurance
due to ill health or advanced age.
‡ The Deed of Partnership should contain a clause that the partnership is
revocable definitely in case of demise of a partner. There should be a definite
provision regarding withdrawals of capital on the demise of any of the partner.
‡ ³Not withstanding anything within mentioned to the contrary , it is hereby agreed
and declared that in the event of dissolution of the partnership firm for any reason
other than death of any of the partners insured under the policy, the within
mentioned policy shall be either.

 $  $&!&( !0-."!%&(2) 6%".6


$ -%$-"!2) 6%".6

‡ As acquired under the policy as on the date of dissolution of the Partnership,

and such paid up policy shall be absolutely assigned in favour of the partners
insured under the policy. ‡Nomination is not allowed (as the owner is the
partnership firm and not the individual partners)
2





:& &!"!2 - 0%%#) $ & (%- 4
Since the partnership insurance is linked to the share of the Partner in the firm, the
following guideline can be used to arrive at permissible amount of Partnership
Insurance:
1. Equal to the capital account of each partner.
We may approve additional cover considering Goodwill of business. This
amount may be equated with the Income generated by the firm in last 3 yrs.
2. For Financial Underwriting we will require ITRs, P&L A/c and Balance sheets
of the partnership firm for the last 3 years.
3. Proposals on the life of all partners will be considered simultaneously and
medical requirements will be as per the Medical chart and age & SA of each
partner .
!0 & 8% $4

1. Partnership deed*
2. Authority letter in favour of an employee or partner of the firm to transact
insurance on its behalf.
3. Audited Profit and Loss account of the Partnership firm for the last three years.
4. Individual partner¶s 3 years Income tax returns.
5. CV or brief information about each partner.







 
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(!)$# !-%0 &!0 *
(%%)$ 4

* !&&%!!0-% *

>*:-!&'0-!&!0-% *

?*5!2 0 &#!&&!*

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(!% .0/
A Key Person is a person who is a major driving force behind a business and
who is so unique and valuable in specific or all areas of the business that
without him/her being associated with the business, there would be a
substantial loss to the company¶s earning capacity.
-! !" . ! 
The death of a Key Person could cause a business to suffer many types of
losses as indicated in the following:.The loss of customers or sales attracted
by his / her ability and personality. >. The loss of his / her day to day specialized
abilities.?.The cost of recruiting and training a suitable replacement.
The delay or cancellation of any business or project upon which he /she is
working. . The loss of opportunities for future Expansion.;.The loss of
opportunities for future Expansion.A. The loss of stable management and good
labour relations.. The reduction of the credit standing of the company.
. Withdrawal of credit facilities by banks or other institutions.B. Recall of
Existing loans guaranteed by the Key Person. C. Refusal of suppliers to
deliver goods without prior payment. . Additional expenses in replacing the
key person
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The idea of Key Person insurance is to indemnify the company for these losses
and allow it to continue, as the same thriving concern that it was while the Key
Person was alive and working at least for a period till there is a replacement
arranged.
As the above losses and expenses are incurred by the company the benefit of
this policy remains with the company and not intended to be passed on to the
family or other beneficiaries of an individual.

:& &!" !2  0%%#) $  .0 

As the concept of Key person is linked to the profit earning capacity of the
company, the maximum allowable sum assured under such policy is also
linked to the profits made by company.
Following guidelines to be observed while suggesting insurance cover on a
key person

A company is eligible for below mentioned amount towards total Sum Assured
under all key person policies bought or proposed by it.

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‡ 10 times of the total annual compensation package for the Key Person, this
includes salary, bonuses and all other perquisites (OR)
‡ 3 times the average gross profits for the company for the last 3 years (gross
profits means profit before tax and depreciation) (OR)
‡ 5 times the average net profit of the company for the last 3 years (NP is
generally profit after Tax and depreciation)

( )!+ &!"&( 0!&%2 $&!&( #%!"&( #!2 ?0 &(!$

+!)$# &( &!&)- 0%%#) 0!&"! . ! "!&(&
!0-.*
&(!)$# !& $(!+ 2 D&(&%"&(  %0! &(!  . !6
&( &( &!&)" 0!&&(%2 $&(!)$# -!& $"! (
 . !%&( &%!&(&(%!0- &%!-,7 # &!&( &!&)
!0- &%!-,7 !")), .0 *

"&(  . !(!)$E;C<!"-%&)!"0%).(!)$EC<!"-%&)
&( %(%&&%!6-!-!)#.&( !0-.+%))# !%$  $6
(!+ 2 &(  )%7%#%)%&.+%))# +!, $!&!&( #%!" .- !F
%!0 *
)))!+ $4 ).
0!2 1% &%2 3*
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!0 & 8% $4

1. Key Person Questionnaire.

2. Memorandum of Association.
3. Article of Association.
4. Audited Profit and Loss account of the company for the last three years.
5. Individual 3 years Income tax returns.
6. CV of the key person.
7. Resolution of Board of Directors to take policy and identification of at least
one person from the company to issue instructions on the policy. Power of
attorney to be granted to this person/s to transact business on behalf of the
company.

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