Key Highlights

*No Insurance company currently sells a Group Gratuity product without a Gratuity Trust

Key Observations: 

• All  Gratuity  Products  offered  by  Insurance  companies  have  a mandatory  requirement  to  set  up  a  Gratuity  Trust.  Thus,  60  days  can  be  considered  a tight  deadline  for  obtaining  an insurance  policy

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• An  employer  should  ensure  that  premium  towards  death  benefit  and  other  charges  are  paid  regularly  so  that  the  policy  can  continue  and  be  renewed  regularly

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• All insurance  products  allow  for  underfunding  between  the  Actuarial  Valuation  certificate  as  per  AS 15  (Revised) | Ind AS 19  and Fund  Value  as  long  as  insurance  policy  charges  are  covered.  This  is because  an  employer  can  purchase  multiple  group  gratuity  policies  and  the  ultimate  liability  to  meet  the  gratuity  obligations  is  of  the  employer

Our Recommendations

The Gratuity Trust Formation process takes a minimum of 15 days if all documents are in order and hence, start early to avoid last-minute hiccups and delays