What is Group Life Insurance Policy?
Group Life Insurance is a scheme that is offered to a group of people by an employer or organization. In Nigeria, this life insurance is made compulsory by law and designed to cater to a group of people not less than 5, to take out a policy for a minimum of 3x the total annual salary of the employee.
The scheme includes but not limited to employees in the public and private sectors (compulsory), clubs, associations, and so on.
How Group Life Insurance Works
Group life insurance is a benefit offered by groups to their members. Most commonly by employers to their workers or sometimes by schools to their students., the insurance contract is between the group and the insurance company, and the participating group members receive certificates of coverage.
Group Life Insurance Rates
Group life insurance rates typically vary and are dependent on the members’ age.
On average, the rate for group life insurance is between 6 and 10 per mille. With the 6 per mille being the industry benchmark as approved by the National Insurance Commission.
How to Calculate Group Life Insurance Premiums in Nigeria
In Nigeria, group life insurance premium is calculated as:
Premium = Sum Assured (Total Annual emolument *3) X Rate/ 1000
Group Life Insurance Eligibility Requirements
Before you’re deemed eligible for group life insurance, the following will be required from you:
- Letter of appointment
- Certificate of registration or incorporation
- Form CO2
- Form CO7 of the assured
- Means of Identification of two directors of the company
- A full schedule of staff or members under the scheme to take the insurance policy
- And any other required document
How Often Does Group Life Insurance Payout?
There are no payouts in group life insurance except in cases of death, accidents or any other conditions as already stated in the policy document.
However, in cases of termination of employment of any of the staff members, while the policy is active, the unused premium is remitted back to the organization taking up the policy on behalf of the staff.
Pros and Cons of Group Life Insurance
The Pros
- Group Life Insurance covers employees who may not be able to afford individual life insurance or are just ignorant of the importance of insurance and its benefits
- It also allows higher-risk individuals to be insured using the leverage of the cover
The Cons
- The employee has little or no control over their individual coverage
- Insurance cover does not continue after you leave the job/group
- Sometimes healthier individuals pay more or the same as those considered as higher risks
Termination of Coverage
Group life insurance policy cannot be terminated. Most times, termination of group life policies exists only at the expiration of the policy which is renewable after every year.