Group Life Insurance (or Group Life Assurance as the Policy is commonly called) is a type of Life insurance in which a single policy contract covers an entire group of people.
Typically, the policy-owner is an employer or an entity such as a Company or a Labor Organisation, and the policy is designed to protect dependants of employees of that Organisation in the event of an early demise.
The policy provides lump sum benefit for the dependants of an employee upon his/her demise in the service of an employer.
This policy is made compulsory by the provisions of the Pension Reform Act 2004 (and most recently Pension Reform Act 2014) which stipulates that any employer with more than three (3) employees must have a Group Life Assurance policy in place and display the Certificate of Insurance in a conspicuous place at the work place.
Section 4(5) of the Nigerian Pension Reform Act 2004 (as amended) stipulates that the minimum benefit to be purchased by an employer of labor should be three times (3X) the employee’s total (annual) emolument.
Group Life Assurance coverage typically remains in force until the employee’s employment is terminated or until the specific retirement age as prescribed in the schedule of the policy which is usually 65-years old.
Group Life Assurance policies are typically provided in the form of yearly/annually renewable Term Insurance.
When Group Term insurance is provided through an employer of labor, the employer usually pays for most (and in some cases all) of the premiums.
The amount of your coverage is typically equal to three times the employees’ annual emolument.
It is worthy to note that the three times annual emolument prescribed by the Pension Reform Act 2004 (and most recently Pension Reform Act 2014) is the minimum purchasable. In practice, some employers of labor purchase more than the stipulated three times the employees’ annual emolument.
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