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insurance policy

CMA RAVI GUPTA (MT in VPL) (493 Points)

04 September 2009

what is keyman insurance policy?please explain with illustration & it's treatment.thanxx in advance

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Pratik More (CA FINAL CS ICWAI AMFI IRDA CGM M.COM ALL NCFM CRTFCT CPM CPA.) (604 Points)
Replied 04 September 2009

KEYMEN INSRNC POLICY IS 2 B TAKEN IN THE NAME OF HEAD OF THE PERSON OF D DEPARTMENT, & ITS GET 2 B MATURED WHEN HE/SHE DIES & AMT ON MATURITY IS TAXABLE IN THE HANDS OF D RECIPIENT IN D YR OF RECEIPTS & TAX BENEFIT IS ALSO AVAILABLE FOR THOSE.

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CMA RAVI GUPTA (MT in VPL) (493 Points)
Replied 04 September 2009

what is the difference between normal policy and keyman insurance policy

Max Payne (employed) (2574 Points)
Replied 04 September 2009

A Keyman insurance policy is a policy taken by a person on the life of another, where the other person has a key role in the organisation of the first person.

If it matures while the Key man is alive, then it is taxable in his hand as "Profit in lieu of salaries" under the head salaries U/s 17(3).

If it is received by the employer on the death of the key man, then it taxable under the head PGBP by virtue of section 28

It is received by the heirs of the key man, it taxable as income from other sources.

Normally, the entire sum received under ordinary life insurancwe policy is exempt from Tax U/s 10(D) including any sum allocated b way of bonus thereon. But this exemption is not available for KIP.