SUMMARIZING PARTNERSHIP INSURANCE
What is Partnership Insurance?
- Partnership Insurance refers to Life Insurance taken by a partnership
firm on the lives of partners. - The objective is to enable the partnership firm / remaining partners to
buy the deceased partner’s share without disturbing the firm’s financial
position. - A partnership firm has an insurable interest in the lives of its partners
to the extent of capital invested by each partner
What is the qualifying condition for this insurance? If partners are so
related that one partner is the sole legal heir of the other partner,
then partnership insurance cannot be considered. All partners must
be insured unless they are uninsurable on medical or age grounds.
related that one partner is the sole legal heir of the other partner,
then partnership insurance cannot be considered. All partners must
be insured unless they are uninsurable on medical or age grounds.
- The partnership deed should contain a clause that the partnership is
revocable definitely in the case of demise of a partner.
What are the documents required for this policy? Normal documents
required for individual partner’s application.
required for individual partner’s application.
- Copy of original and supplementary partnership deed. Copy of payment
instrument. - Consent letter to place an endorsement on the policy.
- Copy of I.T. returns of the partnership firm for the last 3 years. Copy of
Audited accounts for the last 3 years. Details of other partner’s
insurance. - Any other documents mandated by AML, KYC and underwriting
guidelines. - In case the premium exceeds Rs. 2 Lacs, we need to collect the KYC
document for partner/shareholder (Beneficial Ownership document).
Financial documents required under Partnership Insurance:
- Partnership deed.
- Individual ITRs of the partner for 3 years.
- Funds will come from the partnership firm account.
- Normal documents as mandated by AML, KYC and Underwriting
guidelines. - Key Person questionnaire
Partnership firm would be the Proposer. The authorized signatory with
the stamp and seal of the firm should sign the PF Authorizing letter
signed and stamped by all partners with name and signature of the
authorized signatory.
the stamp and seal of the firm should sign the PF Authorizing letter
signed and stamped by all partners with name and signature of the
authorized signatory.
What is the procedure to be followed to buy this Policy?
- Policy to be endorsed stating that in case of dissolution of firm for
reasons other than death of partner, the Policy will either be
surrendered or absolutely assigned in favor of the insured Partnership firm being the owner of Policy, nomination is not possible. - Assignment, except in case of dissolution of firm not allowed.
Which all polices can be bought under partnership Insurance?
Only the Term Plan is allowed under this Policy.
What is the tax benefit available with this policy?
Policy proceeds will be treated as income of the firm and is not exempted
u/s 10(10D).
u/s 10(10D).
What is the benefit of having partnership insurance?
Benefits of Partnership Insurance are as follows:
- Takes care of financial insecurity in the event of a partners death
- Ensure Business continuity in adverse circumstances.
- Tax benefits to the firm.