Group Life Insurance Scheme
A group life insurance contract covers members of a group. The group could be employees, members of a club, society, association, church, mosque etc. It provides financial compensation in the event of death of a member of the group. Death, for this purpose, includes natural or accidental death. The scheme operates on a 24-hour, world-wide basis.
Section 9 (3) of the Pension Reform Act 2004 makes it mandatory for employers of labour to provide life insurance cover for their employees. The minimum benefit specified by the Act is three times the employee’s total emolument. NSIA group life insurance scheme fulfils this requirement perfectly.
Aims of the Scheme
The main aims of a group life scheme are as follows:
- To provide specified benefits on death of an employee (minimum of 3 times total emolument)
- To relieve the employer of financial commitments associated with employee’s death (e.g. compulsory payments, burial cost etc)
- To attract and retain good employees
- To create goodwill between the employer and the employees
- To give peace of mind to the employees while working
- To comply with the provisions of the law
Clubs, Associations etc.
- To provide specified benefits on death of a member (e.g. fixed amount of N5m)
- To relieve the group of financial burden associated with a member’s death (eg burial cost, child education etc)
- To encourage membership
- To promote the concept of brotherhood and social responsibility
- The scheme is arranged primarily to provide benefits in the event of death only whether natural or due to accident.
- Benefits are usually in form of Lump sum.
- It is very cheap and, indeed, the cheapest form of life insurance
- Medical evidence may be required in certain cases
- It is arranged for a period of 1 year but renewed annually thereafter
- Cost is usually met solely by the Employer. Employees do not contribute towards the cost of the scheme.
- It operates on a 24-hour, world-wide basis.
The following data are required for necessary computation of benefits and the corresponding premium:
- Names of employees/members
- Date of Birth
- Date of Employment
- Date of joining (for clubs, associations etc)
- Required level of benefits (i.e Sum Assured)
- Commencement Date