group life insurance: The complete guide

What is Group Life Insurance?

Group Life insurance coverage, also known as group life assurance, is one of the most important and cost-effective employee benefits you can offer to your employees. 

How does it work? 

Group Life Assurance is formed by one single contract covering an entire group of people. It entails a policy owner, which can be an employer or entity such as an association or labor organization, and the policy coverage, which includes all employees or members of an existing group. If you need help with group life insurance costs in Nigeria, let us know, we are here to help.

Family and financial security come at the top of the ladder of life priorities for most. It brings about a higher sense of security, happiness, motivation, productivity and more. Why not ensure this to your employees within their workplace? After all, we all know that a productive workforce is a key driver of an organization’s success.

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Mr. John was a business owner of a small business in Lagos. He was a happy man as he knew that his family and financial stability was well protected. Everyday he would happily work, feeling motivated and productive, like a natural leader.

However, when arriving at his workplace he realized that his staff did not feel the same way. He strived to build up a positive atmosphere, yet he found that something essential was missing. He understood that his team did not feel the security for them or their family as he did, and this made them feel unmotivated, which in turn, also affected him.

By having a Group Life and Accident Insurance as a part of your employee benefits package, you will create and enable a secure environment for your employees, which in turn will boost their overall productivity and performance at their workplace.

Characteristics of Group Life Insurance in Nigeria

 

1. The Entity or Employer is the Policy owner and keeps the insurance policy, known as the Master Contract.
   • In essence, the administration of group insurance differs from individual insurance as the contract is made with the employer rather than with each individual. Therefore, there isn’t a stand-alone Group Life policy for individuals, as the policy owner would be the employer or union head.
2. The cost of coverage in Group Life Insurance in Nigeria is usually cheaper than the cost you would pay for an individual employee with a similar amount of protection.
   • Indeed, by purchasing Group Life Insurance policy coverage through an insurance provider on a wholesale basis for your employees, companies can secure costs for each group member at a much lower rate than if they were to purchase an Individual Life policy.
3. Because of the size of its membership, free cover limits can be granted.
   • This is the coverage each policy member can buy without any required medical evidence or underwriting.
4. Companies with over five employees must have Group Life insurance in Nigeria as employee benefits.
   
   • As stated by the Pension Reform Act 2004, companies with +5 staff members must have Group Life. The employer must bear all costs of the procurement of the Group Life Assurance Policy (in addition to, and separate from, the contributions made by the employer to each employee’s Retirement Savings Account (RSA).
5. The premium payable depends on the ages of the insured in the group and the Sum Assured, either in multiple annual earnings or in a lump.

 

Benefits Of Group Life Insurance

 

Once we have understood what Group Life Insurance is and what it entails, let’s take a rundown on the advantages that including it in your employee benefits package has for your business and its employees:

Brings Value to Employers

1. Shows that you have a Sense of Responsibility
   • According to the experts, acquiring employee benefits plans for your employees is beneficial as it shows your concern for them, thus helping the organization attract more talented employees.
2. Leads to Higher Work Productivity & Performance
   • It helps create a stress-free environment for the employees. It allows them to nurture productivity which in turn benefits the employers by meeting their short and long-term business objectives.
3. Cost-effective
   • You can purchase Group Life Assurance at a lower cost than you would purchase a policy for each individual employee or/and have to pay out of personal pocket to compensate the family of a demised employee.
4. Ease of Administration
   • Since it is purchased as an annual enrollment event, it is predictable and easy to manage

Brings Value to Employees

 

1. Convenience
   • A group insurance plan is beneficial for those who can’t afford to purchase a standalone life insurance policy.
2. Affordable Premium Rates
   • The cost of a group insurance plan is more affordable as compared to the basic life insurance plan because the risk percentage is equally distributed over the entire group.
3. The available option to expand the coverage of the policy
   • The policy can be extended to cover Accidental Death & Disability plus Medical Expenses.

 

What is the Difference between Group Life Insurance and NSIFT?

The first difference between GLI and NSIFT is their nature. For one, GLI comes from an employer, whereas NSIFT is a Social Insurance Scheme. Payment upon death situations is also different: here GLI would pay a total sum of several months of salaries while NSIFT would pay it out monthly.

 

However, they do have similarities in the way that, in essence, they are both mandatory to an extent. Indeed, the Employees Compensation Act has made social insurance with Nigeria Social Insurance Trust Fund (NSITF) compulsory for all staff and employers in the public and private sectors nationwide. And by law, if companies have more than a certain number of staff, they would also need GLI. Which in turn, makes it more expensive for the employer to operate.

 

Help your employees and their families stay financially protected and better prepared while nurturing and enjoying the benefits of a motivated and productive workforce from within.