As a follow up to our last Ed-Post (read here) where we discussed about the Group Life Assurance policy which is a type of Life insurance in which a single policy contract covers an entire group of people and which is typically taken up by Organisations (or Labor Firms if you will) as mandated by the Pension Reform Act of 2004 (as amended), below are a few benefits to organisations who comply with the extant laws in this regard:
- Cash Flow Management: It relieves an employer of spontaneous financial commitments in the event of an employee’s demise. Organisations tend to want to make some form of contribution to the family of the deceased employee should an employee die while in the employment of the Company and it is not in all cases that this payment(s) is convenient for the employer. Having a Group Life scheme for the employees of an Organisation serves as a form of respite to the employer as funds are more or less readily available to be disbursed to the dependant family of the deceased;
- Financial Security: This is a corollary of Point No. 1 above. Having a Group Life cover in place serves to give the employees peace of mind knowing that adequate arrangements have been made to provide financial security for their family in the unfortunate event of their demise;
- Free Medical Examination: Is some cases, medical examination will be required for some of the staff cost of which will be borne by the insurance carrier and which is to the benefit of the employee. A Free Cover Limit (FCL) is usually incorporated in Group Life policies and this is a set monetary limit. This limit simply means that employees with benefits (annual emolument times the purchased multiple of cover-usually 3 times as mentioned in the last post) above the FCL will be mandated to go for medical examinations as specified by the Insurance carrier. The costs of this examination will be borne by the insurer while the affected employee(s) will get a comprehensive medical work-up.
- Tax Relief: Organisations who arrange Group Life schemes also enjoy tax reliefs associated with the premium paid under the scheme. The Group Life Certificate (or evidence of Insurance) can be presented to the tax authorities in order to enjoy the relief which obviously translates to less money being paid to the tax authorities.
- Corporate Social Responsibility: When an organization has a Group Life Assurance scheme in place for its employees, it is actually contributing to human welfare. It is indirectly cutting the number of destitute on the streets, and reducing the number of unhappy families in the society who have lost their bread winners.
- Good Public Image: By providing financial compensation to employee’s dependants through the operation of a Group Life Assurance scheme, the employer is indirectly enhancing its own image as it projects the Company as a good Organization people would be willing to work for or do business with.
This list is not exhaustive.
We will conclude the Group Life session by highlighting other ad-ons/extensions that can be purchased on the Group Life Assurance policy in our next Ed-Post.
Stay tuned and stay blessed.