Question

How is the rate of interest in a Gratuity Insurance Plan typically structured?

a.

It has a fixed rate of interest.

b.

It has a variable rate of interest.

c.

It has a guaranteed part and a non-guaranteed part.

d.

It does not earn any interest.

Posted under IC 89 Management Accounting

Answer: (c).It has a guaranteed part and a non-guaranteed part. Explanation:The rate of interest in a Gratuity Insurance Plan will have two components: a guaranteed part and a non-guaranteed part. The non-guaranteed part would apply only to withdrawals taking place in that year and is not guaranteed for the subsequent years. The guaranteed part once allotted is guaranteed.

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Q. How is the rate of interest in a Gratuity Insurance Plan typically structured?
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