17 March 2010
I am a LIC Agent. While canvassing for this scheme, I have come to know that one of the other agents has stated that this scheme can be opted only when the Shareholding of the particular employee is not exceeding 5%. Is that true ? I am planning to take this insurance for a director who is also keyman and owner of the company. Pl. guide urgently.
27 February 2012
Please advise this insurance scheme only if completely aware of EMPLOYER EMPLOYEE INSURANCE SCHEME as it is not the same as Keyman except for some basic similarities there are many differences. The EMPLOYER EMPLOYEE INSURANCE is a SCHEME and not a particular insurance, which needs to be applied in a given circumstance.
If you are an agent then you are not authorised to advise a client on this policy but needs to be done by a CFP or similar like CFPA's or Tax consultants who are expertise in this scheme, as not all are. This is as there are many things to consider before and after a policy has been taken, a simple error can mean the customer or the director as you say can be charged tax + interest + penalties by the IT.
The 5% shareholding limit is followed by most insurance companies as this is an internal agreement between them and not a guidance of the tax laws. (In passing it must be said that there are other issues to check too and 5% factor is not important to the tax laws).
Note: Most of the incorrect sales are done by people eager for large premiums and insurance company sales managers, bankers and agents are not the best for this.
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