BUSINESS INSURANCE-BY.P.T.PATIL

PRESENTED BY:-P.T.PATIL DOLIC HUBLI III

Training Materials for Agents
&
Not for Private Circulation

PLAN TODAY FOR BETTER TOMORROW

Planning to Insure Your Business

Your business is unique.
Your business needs a business
insurance plan that fits your business.
Here we look at the preparations and
considerations necessary to properly
insure your business.

When considering what types of policies your
business needs, it can quickly become very
confusing to keep the terms straight. An easy
way around this dilemma is to keep in mind that
all business insurance and all policy types cover
one of four things: property, liability, people or
income.



Property: The property used in your business
such as the structure you do business in or the
vehicles used in your business need to be
protected.
Liability: No one is perfect, your business may
make a mistake and, especially if your business
is open to the public, there is always the chance
your business will be held liable for an injury or
error.
People: At the heart of every business are its
people. You and your officers, managers and
employees are the company's greatest assets
and must be protected.
Income: Without income the business does not
survive



Most home-based businesses will be sole
proprietorships or partnerships. As such, the law
sees you and your business as inseparable. If a
liability claim is successfully made against you
and your insurance isn't adequate, then you face
losing your personal assets, including your
home. It's one thing to lose money when a
business fails — it's quite another to lose your
family home because you failed to insure
yourself adequately.



To Get
‘MILLION DOLLER’ Advice ? &
To Protect Your Business
Contact Our LIC Advisor

Buy your tomorrows today



Want to
Achieve your
Financial
Goals?
Select an
Advisor,
not a product



Making money is easy. Keeping it is the hard part

TIME VALUE FOR MONEY


When it comes to financial planning,
Life Insurance is your Life Jacket.



SAFETY

3 “S” SECURITY

STABILITY

MARRIED WOMEN PROPERTY ACT



CREATION OF IRREVOCABLE TRUST
THROUGH LIFE INSURANCE CALLED

MARRIED WOMEN
PROPERTY ACT
INSURANCE


Financial Protection
Flexibility to start
Flexibility to start
at any stage
at any stage
Solution Disputes settlement
Disputes settlement

Estate Protection
Estate Protection Estate building
MWP
Policy
Professional
Provides
Tax Advantage
Tax Advantage
Indemnity
Income Protection
Protection against
Protection against
Income Protection
Creditors
Creditors

No changes
No changes
in Lifestyle
in Lifestyle

SECTION 6 OF M.W.P.ACT 1874 PROVIDES,

Any Married can take a Life Insurance Policy on his own
life expressed on the face of it for the benefit his wife,(
his wife & children or any of them. Such a policy shall
ENSURE deemed to be trust for the beneficiaries so
expressed & shall Not ,so long as the object of the trust
remains, be subject to the control of the husband or his
creditors or form part oh his ESTATE
Under MWP, there will be 3 separate bodies namely
1) life assured 2) trustees 3) Beneficiaries


WHO CAN TAKE M.W.P.POLICY

• Any Married Man (including widower or Divorce
(Not a Bachalor or Women) what is important that to
become eligible for taking this policy male member
should have once married and subsequent to this
his wife may have expired or divorced. It is not
necessary that wife should be alive as on taking the
policy.
• Male married proposers who are Non-resident of
India.


WHO CAN TAKE M.W.P.POLICY

Women, even if married and having her
independent income and estate can not
effect a policy on her own life. And also
male member who is unmarried or about
to be married through shortly after issue of
the policy can not take the policy under this
act


WHO CAN BE THE BENEFICIARY

1)Wife alone,
2)Any one or more children alone or the wife and
3)Any one or more children together. In above
definition, the word 'children' means children by
blood only of the proponent. However, if the
proposer is Hindu alone, then even adopted
children are also included in the definition of the
word of children.
4)Can provide with equal or unequal shares in policy
monies. If the proposer has more than one legally
married wives,All of them will take jointly as wife as
a class.
5)It is not necessary he should have a child in
existence on the date of proposal.



Hence, Mohamedan Proposer have to
appoint beneficiaries by name only who are
living and existing at the time of proposal and
also must mention respective shares of the
different beneficiaries which may be equal or
specified unequal shares.
Provision of contingent or alternate
beneficiaries is available. But it is not available
for Mohamedan proposer.



The position in case of Muslim (Mohamedan)
Proposer is as follows:-
• Under the Mohamedan law, a gift by way
of trust subject to any condition can not be made
in favoure of an unborn person.
• Similarly no provision can be made for the
benefit of wife as a class or children as a class.
Mohamedan Proposer can not provide
beneficiaries jointly or survivor or survivor of
them i.e joint tenancy.
• Hence, Mohamedan Proposer have to
appoint beneficiaries by name only who are
living and existing at the time of proposal
and also must mention respective shares of
the different beneficiaries which may be equal or
specified unequal shares.



Where appointment of more than one beneficiary
is made under the policy, it may be made either
as 'Joint tenant' or 'tenants-in -common'. On the
death of last surviving beneficiary, the entire
policy money will be payable to the legal
heirs of such last survivor but not to all legal
heirs of all deceased beneficiaries.


Benefits:

• When you purchase your Policy under
MWP act, you are making sure that the
claim amount be distributed among the
mentioned beneficiary equally or
unequally as specified by you.
• Please understand that you cannot
appoint a nominee under this policy,
since nominee is the person who is just
authorized to receive the amount but not
use it.
• You can appoint Specific beneficiary in
the form of your wife or Children or Joint
beneficiary with specific amounts.


Benefits:

• The Claim amount will be held as trust and
this will not be added in your estate. So Your
Creditors will not have any right on it.
• You can appoint Specific Trustees for claim
proceeds which they will held for the benefit
of beneficiaries and if permitted by the trust
deed use it as per instructions.
• You can appoint any corporate or bank as
specific trustees.
Thus if you want your claim proceeds to be
used for the benefit of your wife and children,
then you can use this act for your benefit.


PLANS UNDER WHICH MWP ACT POLICIES CAN BE ISSUED

All plans where life assured and Proposer are same.
Joint Life Endowment Assurance Plans like Plan 89
can not be allowed.
Policies financed through provident fund or
DSOP fund can not be allowed, since these
polices will be required to be assigned to provident
fund and DSOP.
Children Deferred Assurance Plans and Policies on
the life of another can not be taken under this Act.
All types of annuities plans are allowed provided life
assured and Proposer are same one.


APPOINTMENT OF TRUSTEES

The function of the trustee or trustees under
MWP act policy is to receive policy money on
claim arising and carry out the objects of the
trust. Where the beneficiaries are all majors,
the trustees will pay to the beneficiaries
the claim amount received from the LIC
unless they have been given specific
directions to the contrary by the person
creating the trust.



Proposer may even appoint a corporate
special trustee i.e a bank or an executor
and trustee co; instead of appointing
individual as a trustee.
Where the beneficiaries are all minors, the
trustees will hold the amount for the
benefit of the minors
Life assured can not be work as trustee,
since sec 6 of MWP act provides that
policy shall not be subject to the control of
the husband.



Special trustees appointed under MWP act
policies would be in the position of trustees
generally and would have all powers and be
subject to all the liabilities and duties of
trustees as defined under the Indian trust act.

Where special trustees have not been
appointed, the policy money at the time of
claim is payable strictly to the official trustee
of the state where the policy is issued.


CANCELLATION OF APPOINTMENT OF EXISTING TRUSTEE
OR APPOINTMENT OF NEW TRUSTEES

A trustee once appointed in the addendum to
proposal or by way of the deed poll can not
be removed by the life assured, unless there
is a specific power reserved to him therein.
Where revocation of the appointment of existing
trustees and appointment of new trustees in their
places is desired , the assured will be required to
execute a deed poll of revocation of old trustees
and appointment of new trustees. The deed poll
will have to be stamped as per requisite stamp
value of the state.
If original trustee have availed any loan
under the policy and life assured seeks for
cancellation of existing trustees and appointment
of new trustee, then alternate trustee or new
trustee may have to accept the old liability.


SETTLEMENT OF MATURITY / DEATH CLAIM

If payment is being made in favor of
beneficiaries and there are one or more than
one minor beneficiaries, or all of them are
minor, payment may be made to the natural
guardian/s OR Legal guardian by the court of
Law, of the beneficiaries.

Maturity claim and Death claim directly to
beneficiaries if the same are named major.

If the sole beneficiary dies, clearly their legal
.
heirs will not have any interest in the trust.


ALTERATIONS IN POLICY AND EXERCISE
OF OPTIONS UNDER THE POLICY

Where the alterations are beneficial to
the beneficiaries as a whole with
consent of life assured alone if
beneficiaries are minor trustees may
apply for alteration.
If beneficiaries are major then life assured
and beneficiaries can apply jointly for
alteration.


ASSIGNMENT AND NOMINATION

Assignment or Nomination by the assured is
not permissible.
A nomination by the beneficiary is also not
permissible.
The special trustees can assign the policy
but only by way of a mortgage with the
right of redemption reserved.
The special trustees can not assign the policy
absolutely.
The trustees can not nominate anyone to
receive the policy money.


LOAN UNDER THE POLICY

If life assured has given the powers to
trustees to raise loan from LIC only for the
benefit of beneficiaries by filling the requisite
addendum at the time of submitting the
proposal, then only loan can be raised.

Life assured can give wider powers to trustees
to raise loan from LIC during the minority of the
beneficiaries or even if the beneficiaries

If loan was granted to the beneficiaries
where no special trustees are appointed, the
reassignment on repayment of loan would be in
favour of the beneficiaries.


SURRENDER OF THE POLICY

Surrender of the policy would be the four
party agreements between LIC, the life
assured, the trustees, and all the
beneficiaries who must be major and
competent to contract.

Application of surrender of policy, surrender
discharge form must be signed by the
assured, beneficiaries, trustees jointly. The
surrender value in such case must be paid
over to trustees only.

when the beneficiary is minor, it can be
done only with the permission of the competent
court.


REVOCATION OR CANCELLATION OF TRUST

A trust under 6 of MWP act is irrevocable in
the sense that life assured alone can not
revoke the trust under the policy.

Where all beneficiaries are named, major,
competent to contract and are of one mind, then
with the consent of all beneficiaries, life assured
can revoke the trust.

The consent of alternative/ contingent
beneficiaries is required to be taken.


ISSUE OF DUPLICATE POLICY / LOSS OF
POLICY DOCUMENT

Where the policy is lost at hands of
trustees, Or by the Life Assured or by the
Beneficiary the indemnity bond may be
executed by the respective parties.


DIVORCE OF WIFE AFTER ISSUE OF POLICY

If the wife is the beneficiary named in
the policy document the policy would
continue as a trust in favour of the
divorced wife and would not belong to
the assured in spite of divorce.

Hence, for entertaining any such
request, the divorce decree must be
called.


DEATH OF BENEFICIARY

On death of the one of the beneficiaries,
the trust will work for the surviving
beneficiary/ beneficiaries.( but not for legal
heirs of deceased beneficiaries )

The assured can not replace a beneficiary in
place of the deceased one.

The heirs can obtain legal evidence of title
from court of law. Thereafter, he can execute
a deed poll of release from the MWP TRUST


CHANGE OF BENEFICIARIES

It is not open to life assured to make
any changes in the trust by deleting any
beneficiaries or by adding any new
beneficiaries.

In case a beneficiaries is a minor
(applicable for alternate beneficiaries),
no change of beneficiaries is allowed.


DEATH OF TRUSTTES

If the appointment of trustees was jointly
or survivors or survivors of them or as
one trustee and an alternative trustee are
there, then there is no need to take any
action.

The other or alternative trustees will come
into operation.

If the trustee was sole trustees has died,
the assured may be suggested to have a
fresh trustee appointed.


CANCELLATION OF A PREVIOUS POLICY & CONVERTING
THE SAME INTO MWP ACT POLICY IN LIEU OF FORMER ONE

It is possible to cancel the existing policy not
issued under the provisions of the act and in
its place issue a fresh policy under the MWP
act.


Eg:- TELGI - Took a policy under MWPA and now
though he is arrested and property attatched, his
family enjoys same life style by surrender cash
value of the policy


HUF Insurance

A Hindu Undivided Family (HUF) is the creation of
the Hindu Law; an HUF consists of all persons
lineally descended from a common ancestor
including their wives & unmarried daughters.
Sometimes HNI clients opine that in their absence a
huge amount of wealth going to Their wife and/or
son may not be the best arrangement and may spoil
them, so on and so forth. Another provision of
income tax that can come handy is the Hindu
Undivided Family clause. An HUF created by the
client or of which the HUF is a co-parecener (male)
/member (female) can propose life insurance on the
life of any of its coparecener / members. The effect
is that the maturity/death proceeds do not go to any
one individual but become a part of the HUF corpus
thus benefiting the entire family and used for such
purposes as may be desired by the client, rather
than being squandered away by 1or 2“black sheep”


Key Person Insurance (KPI)

Under KPI, a business can protect itself against
economic setback in the event of death of its key
personnel; the business by having such risk
management practices in place can attract better
talent, have the trust of creditors, bankers, vendors,
clients etc. and can have a business continuation
/succession plan in place. Under KPI, the
company/firm proposes insurance, pays premium
while the life insured is the KP. Premiums paid
under KPI are allowed as expenditure under section
37(1) thereby helping the firm reduce its profits for
the year and thereby lowering taxes.
Claim, if any, is payable to the firm as compensation
/corpus to undertake necessary expenditure in
hiring and training a replacement of the KP, thereby
allowing business continuity and free from
disruptions.


Partnership Insurance (PSI)

A firm has insurable interest in the life of its
partners and can buy insurance on the lives of
partners. Like KPI, a partnership firm can protect
itself against interruptions to business,
interference from family members and costly
litigation in the event of unfortunate death
of a business partner. Again, premium paid by a
firm for keeping a policy on the life of a partner in
force, is deductible as business expenditure under
section 37(1) and claim, if any is payable to
the firm. HNI clients who are in business and in
arrangements such as partnerships can secure
their business, built with sweat and intellect;
ensure that the business continues to exist For
future generations and carries their dream forward.
Note: Only Term Insurance is permitted under KPI
and PSI.


Employer-Employee Insurance (EEI)

HNI clients, who are in business or in high ranking positions
with organizations can consider arrangements to increase
loyalty of their employees and in turn improve motivation
and reduce turnover in this era of high aspirations of
employees. Employer-Employee insurance arrangement
permits a business to pay premiums for life insurance on the
life of their employees (not necessarily KP) and allow the
benefits to accrue to the employees. Unlike KPI or PSI
above, EEI claim proceeds are payable to employee/their
beneficiaries only and no benefit accrue to the employer.
Due to this, the premiums paid on behalf of employees are
treated as perquisite in the hands of the employees under
section 17(2) and can in turn be claimed as deduction from
income under section 80(c). Arrangements can be made
where the employer is the Proposer (scheme A) or the
employee (scheme B) itself is Proposer and Life Insured
while the Employer is only the premium payor.
Note:
All type of insurance plans can be pitched under EEI,
including pension plans.



Living for the Moment, without a thought for
Tomorrow, is a foolish investment in the Future


PRESENTED BY:-P.T.PATIL DOLIC HUBLI III
CELL NO.9448133179
E-MAIL- patil179@yahoo.co.in

Disclaimer:
The views mentioned above are of the author only. Data
and charts, if used, in the article have been sourced from
available information and has not been authenticated by
any statutory authority. The authors do not claim it to be
accurate nor accept any responsibility for the same

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