INDIA - COVID-19 Death-in-Service Benefits to Employees’ Dependents Triggering Mandatory Actuarial Accounting Valuations and Employer Reporting
Technical Update (India)
- Organisations in India have announced generous Long-Term Benefits to dependents of employees who have passed away due to Covid-19.
- Death-in-Service Benefits to employees’ dependents could trigger mandatory actuarial valuations and reporting under Accounting Standards
Since March 2021, India has witnessed a severe second wave of the Covid-19 pandemic leading to a significant loss of lives. The cumulative loss of lives on account of Covid-19 exceeded 350,000 as of June 2021.
Historically, organisations in India provided supplementary group insurance plans to employees in the form of term life insurance benefits. As these benefits are insured, they are classified as short-term benefits and do not require actuarial valuations for financial liability disclosures.
However, over the last few months several organisations have announced generous supplementary benefits to families of the deceased employees on a self-funded basis, in addition to the term life insurance benefits. Some examples of the supplementary benefits announced to date are:
- Last earned Salary of the deceased employee to be paid to the spouse or family for a specific period of time or until a notional retirement date of the deceased employee
- Education support in the form of reimbursements or scholarships to children of the deceased employees up to specific ages or on attaining graduation
- Participation of the family of the deceased employee in the organisation’s medical insurance plans or reimbursement of medical expenses up to specified limits
- Lump sum amount paid by the organisation to the spouse of the deceased employee
- Set up of an Employee Welfare Trust to provide the above benefits
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