Group Life Insurance, How it work, Policy – All What You Need To Know

Group Life Insurance, How it work, Policy - All What You Need To Know

All You Need To Know About Group Life Insurance

A corporate program for a group of people is group life insurance. This life insurance is required by law in Nigeria. In essence, it serves these groupings to obtain a policy for a minimum of three times the yearly pay of all the employees. Typically, there are at least five persons in the group.

The scheme includes employees in the public and private sectors (compulsory), clubs, and associations.

How does Group Life Insurance Work?

Groups provide their members with group life insurance as a perk. Usually by businesses to their employees, though occasionally by schools to their pupils. Consequently, the insurance provider and the group typically enter into a contract. In essence, certificates of coverage are given to the participating group members.

Group Life Insurance Rates

The cost of group life insurance often varies and is based on the age of the participants.

The cost of group life insurance ranges from 6 to 10 mille on average. The 6 per mille, as authorized by the National Insurance Commission (NAICOM), continues to be the industry standard.

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How to Calculate Group Life Insurance Premiums in Nigeria

In Nigeria, you can calculate group life insurance premium with the formula:

Premium = Sum Assured (Total Annual emolument *3) X Rate/ 1000

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Group Life Insurance Eligibility Requirements

Before you’re are eligible for group life insurance you’ll need the following:

  • Letter of appointment
  • Certificate of registration or incorporation
  • Also, 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
  • Lastly, any other required document

How Often Does Group Life Insurance Payout?

Group life insurance only pays out in the event of death, an accident, or certain other circumstances. The policy paper must have these requirements.

However, the organization acquiring the policy will receive the unused premium if an employer fires employees while the coverage is in effect.

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 you to insure higher-risk individuals using the leverage of the cover.

The Cons

  • The employee has little or no control over their 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

Group life insurance Termination of Coverage

The group life insurance coverage cannot be cancelled. Most of the time, group life insurance contracts can only be terminated when the plan, which is renewable after one year, runs out of money.

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What Is the Purpose of Group Life Insurance?

Group life insurance is a common employee benefit that provides a death benefit to the insured’s beneficiaries if they die while part of the organization. The purpose is to provide financial support to the families of such employees.

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What Happens to Group Life Insurance Coverage After I Retire?

Once you leave the organization, group life insurance terminates (either immediately or after a short grace period). This includes being fired, quitting, changing jobs, or retirement. Certain employees may be able to convert their group coverage into an individual policy upon retirement, but the employer may not continue to pay these premiums.

What Are the Types of Group Life Insurance?

The most common type of group life insurance is group term insurance that renews yearly. This type of insurance provides only a death benefit and is the least expensive option. Group universal life is more expensive, but offers the opportunity to build cash value alongside the death benefit. Variable group universal life is similar but offers an investment option for increasing the potential returns on the cash value portion.

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