HDFC SL Group Traditional Plan

What is HDFC SL Group Traditional Plan

HDFC SL Group Traditional Plan is a cost-effective group savings insurance solution designed to help organizations build a financial corpus for their employees. This non-linked, non-participating plan allows companies or affinity groups to act as the policyholder, providing members with essential life insurance coverage while also focusing on savings.

Features of HDFC SL Group Traditional Plan

Following are the key features of the HDFC SL Group Traditional Plan: 

• Financial Security: This plan helps secure employees' financial needs through assured returns at maturity, ensuring stability for the organization.
• Tax Benefits: Master policyholders can avail of tax benefits as per current tax laws, enhancing the plan's financial advantages.
• Withdrawal Options: Members can make withdrawals under defined circumstances within a financial year, offering flexibility in accessing funds.
• Annual Interest Earnings: The fund earns annual interest, which is credited at the end of each financial year, providing clarity and predictability in returns.
• Multi-Year Guarantee: The plan features a multi-year guarantee, ensuring returns over a specified period.
• Interim Interest Credits: Depending on the performance of the product portfolio, interim interest credits may be provided, adding potential value to the investment plans.

Eligibility Criteria for HDFC SL Group Traditional Plan

Benefits of HDFC SL Group Traditional Plan to the Policyholder

The HDFC SL Group Traditional Plan offers the following benefits: 

• Assured Benefit: A guaranteed 1% p.a. return on the Account Value, which includes the Sum Assured and accrued interest credits, applicable on death and maturity.
• Interest Credits: Annual Compound Interest Credits are declared based on fund yields, with a maximum 80 bps difference between gross and net yield. Interim Interest Credits are provided for claims during the year.
• Benefits on Maturity: For policies with individual member benefits, the maturity benefit is the higher of the Sum Assured, accrued Interest Credits, and Assured Benefit. For defined benefit schemes, the benefit is paid according to the employer’s rules.
• Benefits on Death: For non-superannuation policies, the death benefit includes the Sum Assured, accrued Interest Credits, and ₹10,000. For superannuation policies, the death benefit is the higher of the Sum Assured and accrued Interest Credits, or the Assured Benefit, as per the policy type.
• Benefits on Surrender: The surrender benefit is the policy account balance, with a charge of 0.05% (max ₹5 lakh) if surrendered within three years, and no charge after three years.

Policy Details of HDFC SL Group Traditional Plan

• Withdrawals: Withdrawals are allowed for death claims, retirement, and other valid payments, up to the Sum Assured, accrued Interest Credits, and interim Interest Credits.
• Mortality Charge: A mortality charge of ₹1 per ₹1,000 of basic Sum Assured is levied, along with any applicable taxes or statutory levies.
• Adjustment of Sum Assured for Claims: The Sum Assured and accrued Interest Credits are adjusted at the financial year-end for any claims, excluding the ₹10,000 basic Sum Assured and interim Interest Credits.
• Free-Look Period: If dissatisfied with the policy, it can be returned within 30 days for a refund, minus the proportionate risk premium and any applicable medical or stamp duty charges.
• Grace Period for Non-Forfeiture Provisions: As a single premium policy, there is no grace period applicable.

How the Plan Works?

Following is a simplified step-by-step explanation of how the HDFC SL Group Traditional Plan works:

• Policyholder: The company or group acts as the master policyholder, managing the plan for its employees or members.
• Single Premium Payment: The plan requires a one-time premium payment from the master policyholder, which funds the entire group policy.
• Interest Accumulation: The fund earns annual interest, credited at the end of each financial year. Depending on performance, interim interest credits may also be provided.
• Guaranteed Returns: At maturity, members receive guaranteed returns based on the policy account value or an assured benefit, whichever is higher.
• Withdrawal Options: Members can withdraw funds under specific circumstances, such as death claims or retirement benefits, with a cap on withdrawals set at 10% of the policy account value at the start of the financial year.
• Maturity Options: Upon maturity, the master policyholder has three choices:
  • Transfer the maturity amount to an existing traditional policy.
  • Reinvest the amount in a new tranche at current interest rates.
  • Withdraw the entire maturity amount.
• Tax Benefits: Both employers and employees can avail of tax benefits according to prevailing tax laws, enhancing the financial advantages of the plan.
• Annuity Purchase: Benefits can be annuitized based on scheme rules, offering additional options for retirement planning.

Suicide Exclusion Criteria

The suicide clause does not apply to the HDFC SL Group Traditional Plan. If death occurs due to suicide within one year from the effective date of coverage or the entry date, the full death benefit will be paid.