A unit-linked group insurance plan for employers to fund employees' gratuity liability

Step 1: Create a Trust to administer gratuity scheme

The employer first creates a trust and appoints trustees to administer the gratuity scheme. However, it may be noted that the trust may or may not be created by the employer. Therefore under the Policy, either Trustees or the employer can be a Policyholder.

Step 2: Make Initial contribution based on actuarial advice

The Policyholder pays an initial contribution (in respect of any past service gratuity liability of the employer) & annual contribution in respect of any gratuity liability accruing in respect of the service completed by the employees in the current policy year) to Max Life Insurance Company towards gratuity liability.

These contributions may be paid at the time of the policy issuance or at any time during the first five policy year in not more than five annual installments.

These payments would normally be based on upon the actuarial advice to the Trustees by an Independent consulting actuary (who is not employed by Max Life).

Step 3: Choose your Investment Strategy

The Policyholder can invest the contributions in any of the 4 investment funds viz. Conservative Fund, Balanced Fund, Growth Fund and Bond Fund offered by Max Life Insurance. Upon choosing the fund, a unit account is opened and managed for the policyholder in which units are allocated following the receipt of contributions and canceled for the purpose of paying gratuity benefit and charges.

Units will be deducted from the unit account to pay out the policy charges and the gratuity benefit amount (other than the life insurance benefit) determined by the trustees.

A member on either leaving service due to retirement/ resignation or on death/disability during the service, or any other such event that may terminate the employment after five years, Max Life Insurance will pay the benefit by redeeming the units in the investment funds to pay the gratuity benefit.

The condition of continuous service of five years is not necessary if the termination of employment is due to death or disablement. The contributions and benefits under the product will be applicable as per scheme rules.

Please note that the maximum liability of company shall be limited to the unit account value of the policy.

Initial Contribution:
Minimum: Rs. 500,000
Maximum: No Limit , as per actuarial valuation AS-15(R)

Life Insurance Cover
Fixed life insurance cover of Rs. 10,000 per member

Group Size
Minimum: 10 at time of choosing scheme
Maximum: No limit

Policy Term
One Year Renewable Scheme


Entry Ages for employees (as on last birthday)
Minimum - 18 Years
Maximum - 74 Years

Maximum cover ceasing age (as on last birthday): 75 Years

The Company may add, amend, alter, combine or close a fund or funds as per the File & Use procedure of the IRDAI. Policyholders will be informed at least 60 days before such action and policyholder will be allowed to transfer their funds to alternative funds without any extra charges provided their request is received by the Company before the scheduled date of such amendment, alteration or the closure.

In case, policyholder does not respond within the given time period of 60 days, the company shall transfer the existing funds to the "least risky" of the available funds. "Least risky" refers to the fund with the highest proportion of Government securities.

Note: Company may increase the fund management charge from time to time after clearance from IRDAI but shall never exceed 1.35% of the Fund Value per annum.

*Above charges subject to applicable taxes, cesses & levies as imposed by the Government.