No.NC/JCM/2020 Date: June 18, 2020
The Secretary,
Department of Personnel & Training,
(Government of India),
North Block, New
Delhi-110001
Dear Sir,
Sub: Central
Government Employees Group Insurance Scheme(CGEGIS)
Ref.: (i) Customized
CGEGIS, Dept. of Expenditure, MoF’s OM dated 07.12.2018
(ii) Brief on Customized Group
Insurance Scheme (Dept. of Expenditure 06.05.2019)
(iii) Brief Note on CGEGIS (DoPT
06.05.2019)
(iv) Revised proposal for LIC’s
customized Group Insurance(GI) for Central Government
Employees
(13.09.2019)
1.
Revision
of Central Government Employees Group Insurance Scheme (CGEGIS) is long
overdue since the rates of Sum Assured and the premium thereof continues to be
the same since it was decided in 1990 inspite of much inflation and devaluation
of money.
2.1. Arising out of 7th CPC
recommendations and based on JCM (Staff Side) representation, the Union Cabinet
had asked the Ministry of Finance to work out a Customized Group Insurance Scheme for Central Government Employees
with low premium and high risk cover.
2.2. Staff Side had pointed out that the
existing Scheme of CGEGIS is having
a proven system. It is good except for non-revision of the scheme since 1990.
2.3. Subsequently, some of the Customized Group Insurance Scheme for
Central Government Employees prepared by LIC was shared with the JCM (Staff
Side).
3.
Main
drawbacks in LIC proposals: Staff Side finds following major flaws in
the proposal submitted by LIC to Department of Expenditure:
3.1
LIC has not given any proposal for the sum
assured of 50 lakh, 25 lakh and 15 lakh
at lesser subscription compared to the recommended by 7th CPC, as advised by
the Cabinet.
3.2
The existing system of CGEGIS is a self-financing scheme, having non-transferable
consolidated fund. When handed over to LIC, it will be treated as a profit
centre. Hence subscription and other conditions will be changed to provide
profit to LIC.
3.3
LIC has proposed a premium(for insurance) 20% higher than 7th CPC
recommendations. In addition to that,18%
GST on the Subscription have to be borne by employees. Hence, employee will
end up in contributing subscription 41.6%
more than the recommendations of the 7th CPC.
3.4
LIC’s
proposal of revising the subscription every year will be disadvantageous to
the employee and as such not acceptable to the Staff Side.
3.5
LIC’s proposal of age based subscription
increases monthly subscription by 4.28
times. It may result in different rates of premium for employees belonging
to different age group working in the same pay level.
3.6
LIC also
proposed for higher subscription if total number of employees covered in
the scheme comes down. This will bring in total uncertainty as staff strength
on roll continues to fluctuate due to retirement etc. and non-filling of
vacancies.
3.7
LIC asked
for transfer of existing corpus (around Rs.500 crore) which was most unreasonable, unprecedented and undesirable, particularly since it does not
provide any matching relief to the employees in terms of lower premium.
3.8
Premium
proposed to be charged by LIC was too high ,considering a very large group
employees to be covered with a sanctioned strength of nearly 38.6 lakh Central
Government employees in the CGEGIS.
3.9
a) In LIC’s
Jeevan Amar Life Term Assurance Plan (UIN: 512N332V01), for the assured sum
of Rs. 50 Lakh at the entry age of 20,
annual premium is Rs.4,356, at the entry age of 30,it is Rs. 6,952. (The
sample illustrative premiums for Jeevan Amar life term assurance plan is
attached as Annexure-I).
b) Even after adding for Saving Fund under CGEGIS @ 3 times of the
premium for Life Term Assurance Plan, the total amount of subscription for
CGEGIS will be less than half of the monthly subscription proposed by the LIC
and by the 7th CPC.
c) Monthly Subscription can be reduced by 20% when the scheme is
applied for more than 30 lakh employees as a Group as per details given in Table-2, based on the Premium
for Individual Term Insurance indicated in Table
1 below:-
Table-1: Monthly subscription in proportion to LIC’s Jeevan Amar Life Term Assurance Plan):
Pay Level of
Employee
|
Insurance Amount
Recommended by 7th
CPC
Rs.
|
Proposed
monthly subscription for CGEGIS
(In
proportion to LIC’s
Jeevan
Amar Term Assurance Plan) (#)
|
Correspond-ing SA
(Savings)
For 30 years of
service @8% annual interest Monthly compounding
|
||
Insurance
Fund (25%)
Rs.
|
Savings Fund (75%)
(##)
Rs.
|
Total
Monthly
Subscription
Rs.
|
|||
Level 10 & above
|
50,00,000
|
600
|
1800
|
2400
|
27,02,331
|
Level 6 to 9
|
25,00,000
|
300
|
900
|
1200
|
13,51,165
|
Level 1 to 5
|
15,00,000
|
200
|
600
|
900
|
9,00,777
|
(#) Based on entry age of 30
years for Individual Term Insurance. (Premium amount rounded off to next
hundred Rs.) (##)7th CPC recommended a ratio of 75:25 for savings
fund to insurance fund.
Table-2 Monthly
subscription for Group Insurance @ 20% lesser than subscription charged by LIC
for Individual Life Term Assurance (shown in table-1) plus savings Fund in the
ratio 25:75
Pay Level of
Employee
|
Insurance Amount
Recommended by 7th
CPC
Rs.
|
Proposed
monthly subscription for CGEGIS - (20% less than LIC’s
Jeevan
Amar Term Assurance Plan’s premium) (#)
|
Corresponding SA
(Savings)
For 30 years of
service @8% annual interest Monthly compounding
|
||
Insurance
Fund (25%)
Rs.
|
Savings Fund (75%)
(##)
Rs.
|
Total
Monthly
Subscription
Rs.
|
|||
Level 10 above
|
50,00,000
|
480
|
1440
|
1920
|
21.61,865
|
Level 6 to 9
|
25,00,000
|
240
|
720
|
960
|
10,80,932
|
Level 1 to 5
|
15,00,000
|
160
|
480
|
640
|
7,20,621
|
4. PROPOSALS OF
THE STAFF SIDE
1.1. Staff
Side proposes that for the sum assured recommended by 7th CPC the
following rates of Monthly subscription @ 20% less than the Premium for
Individual Term Insurance plus Savings Fund as derived in table-2 above.
Pay Level of
Employee
|
Insurance Amount
Recommended by 7th
CPC
Rs.
|
Proposed
monthly subscription for CGEGIS - (20% less than LIC’sJeevan Amar Term
Assurance Plan’s premium)
|
||
Insurance
Fund (25%)
Rs.
|
Savings Fund (75%)
Rs.
|
Total
Monthly
SubscriptionRs.
|
||
Level 10 & above
|
50,00,000
|
480
|
1440
|
1920
|
Level 6 to 9
|
25,00,000
|
240
|
720
|
960
|
Level 1 to 5
|
15,00,000
|
160
|
480
|
640
|
4.2 Monthly
Subscriptions of Rs.1920, Rs.960 and
Rs.640 for Sum Assured of Rs. 50
lakh, 25 lakh and 15 lakh for the Levels proposed by the 7th Pay
Commission respectivelyand payable to the family of the deceased employee in
case of an employee’s death.
4.3 Ratio of the Insurance Fund and Saving Fund should be 25% : 75% respectively.
4.4 In
case of retirement, employees be paid a maturity benefit in proportion to the
subscription, length of service and applicable interest rates.
4.5 The CGEGIS should continue to be handled by
the Government as here to for.
4.6 The proposal to tie up with LIC should be dropped forthwith
especially keeping in view the drawbacks in the proposal of LIC, as enlisted
earlier in this letter,
4.7 The Revised
Scheme, drawn after consideration of the above proposals, may please be
discussed with the JCM Staff Side, and be finalised early as the revision
thereof has already been delayed for too long.
Hoping for an early favourable decision on the long pending
issue is solicited
Encl: 1 Annexure
√Copy: Secretary,
Department of Expenditure, Ministry of Finance – for necessary action please.
Annexure I
LIC’s
JEEVAN AMAR LIFE TERM ASSURANCE PLAN (UIN: 512N332V01)
The
sample illustrative premiums for both Option
I (Level Sum Assured) and Option II
(Increasing Sum Assured) for Basic Sum
Assured of Rs.50 Lakh.
Option I (Level Sum Assured):
Age
|
Policy
term
|
Regular
Annual Premium
|
Annual
Premium for limited premium Paying term of (Policy term minus 5) years
|
Annual
Premium for limited premium Paying term of (Policy term minus 10) years
|
Single
Premium
|
20
|
20
|
Rs.
4,356
|
Rs.
5,104
|
Rs.6,556
|
Rs.48,928
|
30
|
20
|
Rs.
6,952
|
Rs.
6,952
|
Rs.8,932
|
Rs.66,088
|
40
|
20
|
Rs.13,545
|
Rs.
13,545
|
Rs.17,595
|
Rs.1,27,395
|
Option II (Increasing Sum Assured):
Age
|
Policy
term
|
Regular
Annual Premium
|
Annual
Premium for limited premium Paying term of (Policy term minus 5) years
|
Annual
Premium for limited premium Paying term of (Policy term minus 10) years
|
Single
Premium
|
20
|
20
|
Rs.
5,715
|
Rs.
5715
|
Rs.
8,595
|
Rs.
63,720
|
30
|
20
|
Rs.
8,415
|
Rs.
8415
|
Rs.
12,870
|
Rs.
94,095
|
40
|
20
|
Rs.
17,664
|
Rs.
17644
|
Rs.
27,232
|
Rs.
1,95,868
|
Eligibility
conditions and other Restrictions:
a)
Minimum Age at entry: [18] years (Last Birthday)
b)
Maximum Age at entry: [65] years (Last Birthday)
c)
Maximum age at Maturity: [80] years (Last
Birthday)
d)
Minimum Basic Sum Assured: Rs. 25,00,000/-.
e)
Maximum Basic Sum Assured: No Limit.The Basic Sum Assured shall be in multiples of: Rs.
1,00,000/-, if Basic Sum Assured for the policy is Rs.25,00,000/- to Rs.
40,00,000/-Rs. 10,00,000/-, if Basic Sum Assured for the policy is
above Rs. 40,00,000/-.
f)
Policy Term: [10 to 40] years
g)
Premium Paying Term:Regular Premium: Same as policy termPremium: [Policy Term minus 5] years for Policy
Term [10 to 40] years : [Policy Term
minus 10] years for Policy Term [15 to 40] years
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