Group life insurance is a scheme organized by a company to its staff. The company encourages its staff to sign up for an insurance that is equivalent to two or at most three times their annual salary. In Nigeria, when you have more than five (5) employees, it is required by the law to sign up for group life insurance scheme. The group is usually not less than five (5) persons, including employees from both public and private sectors. Generally speaking, in group life insurance, one insurance certificate issued to the company by the insurance company can cover a group of people.
How does group life insurance works in Nigeria?
Group life insurance is often provided to workers as part of their benefits in Nigeria. In some cases, you will discover that group life insurance is cheaper compare to what a single person will pay to protect himself under the same policy agreement. So my advice is that if you are lucky to be included in a group life insurance by your organization, don’t reject the offer especially when you are not financially buoyant enough to buy individual coverage.
In Nigeria, as an employee who is under group insurance coverage, your organization keeps the actual insurance policy agreement(certificate) known as the master contract. Everyone who are under the group life insurance also receive certificate of coverage as proof of insurance and not the actual policy. In group life insurance, you are allowed to choose your beneficiary , which can be any member of your family or close relation. The numbers of your beneficiaries depend on the agreement between your organization and the insurance company.
Term group life insurance
Due to the fact that not every staff of a company would like to remain in the company for ever, companies usually go for Term group life insurance. Term insurance is the most common type of group life insurance scheme, because it allows the company to do a yearly renewal of the policy. So as an employee who is under group life insurance scheme, your insurance coverage remains active until your employment is terminated or the specific term of coverage ends. And if the specific term of coverage ends, it is at the discretion of your organization to renew or not renew.
How ever, you may choose to convert your group life insurance to individual policy if you leave your employer. Many choose not to covert because the conversion premium tend to be much higher.
What you need to register for group life insurance
Before you sign up for group life insurance scheme in Nigeria, you should make the following document available.
- Letter appointment/ contract letter agreement
- Means of identification
- Certificate of registration or incorporation
- Also, Form CO2
- Form CO7
- Means of Identification of two directors of the company
- List of Staff to be registered, levels and qualifications
- Any other documents that may be required by the insurance company.
Pros and Cons of group life insurance
- Cheaper than individual life insurance
- Using the leverage of the policy cover, you can insure high-risk individual
- You are issued certificate of coverage which you can use to convert to individual insurance if you want to.
- Employees have no control over their coverage
- Insurance cover ends the day you leave the organization
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