LIC Keyman Insurance is mainly used by a comonay or the corporate body for the life of the director of the company whose services have a huge role or importance in the profit of the company. The sudden death or accident of the director or the chairperson of the company can adversely harm the progress of the company. There can be more than one Key person of the company.
To hold a LIC Keyman Insurance certain requirements are there which are given below:
- To hold this policy a copy of memorandum and the articles of association are required.
- More than one copies of audited balance sheet, P&L A/Cs for previous 3 years.
- The true certified copy of board resolution passed in the board meeting. The copy should contain the information of sum assured desire, plan allowed 14, 48, 164, 93, 95, 88, 140 of LIC, name and signature of the person who is authorized and can complete the proposal papers.
- The LIC Keyman Insurance qustionaire is to be completed in the hand format of the person and should be signed by the person under the seal of the company.
- The copies of IT return of the company for the previous 3 years.
- The authorization is to be placed on the policy.
- The revised LIC Keyman Insurance questionnaire is to be attached.
The benefits of the Keyman Insurance are as follows:
When the company is taking the insurance policy for the life of the Keyman of the company it should be permissible BUSINESS EXPENDITURE U/S 37 (1) of I.T. Act,1961along with the referred CBDT letter No. 35/12/64-11 Dt.03.02.1964 addressed to L.I.C.& Finance bill 1996.
Thus the premium paid will be covered by the savings in income tax and then the tax liability will be reduced.
The company can also create an asset for itself in the premium paid form.