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A business run by several parties jointly is called
partnership generally the partners carry on the partnership
in their own way. The partnership insurance is given
to all the insurable partners in the firm if there id
a partnership greement, which declares that if any partner
dies, the living partners Will have right to purchase
the deceased partner's share in the firm. If all the
partner of the firm are insured, the partnership firm
should have enough cash available to purchase the deceased
partner's share.
All the insurable partner are to insured. All firm run
partners in partnership has an insurable interest in
each partner's life to the extent of the amount of "purchase
money' which is needed to be paid on the basis of each
partner's share. If any of the partner dies the proceeds
will be paid to the firm. For the settlement of the
share of the share (in part or full) these proceeds
are paid on the legal heirs.
Criteria to be satisfied under 'partnership insurance':-
- Minimum S.A.- Rs.50,000 and not exceeding the minimum
amount of capita brought in by any single partner.
- The lives of be all the partner should be insured
simultaneously under partnership of insurance.
- All the partner to be insured must get the insurance
in respect of their capital.
- The partnership agreement should have a clause that
the partnership can be revoked definitely if a partner
dies.
- The difference between the ages of two partner (youngest
& oldest) should not be large .
- The policy should mature before the oldest partner
gets the age of 75 years.
- At the death of the partner capital must be withdrawn.
- Plan of assurance allowed -only 14, 48 & 162
- Nomination -not allowed
- Assignment -not allowed, except the partner ship
is broken and the firm can not pay the premiums other
then the partner's death is caused.
Requirement:-
- Copy of the partnership deed with a clause declaring
that if a partner dies, the remaining partners have
option to purchase the deceased partner's share on
specified term and conditions in the partnership deed.
- Copies of I.T.R. of the firm for last 3 years duly
attested by the authorized partners.
- Audited balance sheet and P & L A/c copies for
the last three years.
- The copy of audited balance sheet having schedule
of partners capital accounts.
- Letter of authority in favour of the partner to
sign the proposal.
- Proposal form no.340.0
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