The Complete Guide to Group Life Insurance
All You Need to Know in 3 Minutes
A life insurance plan is an agreement you make with an insurance company to pay your beneficiary a certain amount in the event of death. This lets those dear to you to carry on with life without hardship. Also gives total peace of mind knowing that the needs of your loved ones are well provided for, whether you are here or not.
Typically, the policy holder pays a premium to the company every year to insure his life. This premium varies but it is only 1% of the amount you want paid to your beneficiary at Heirs Life.
Now, a group life insurance plan is a life insurance policy taken by a group, to cover its individual members. It is usually taken by employers or secular associations or organizations, like cooperatives or labour organization, to insure the life of its people.
Because those members contribute mentally and physically to the organization, loss of life may occur, and it makes sense to not only secure the health of your people but also take care of their loved ones.
The Benefits
Purchasing a group life plan benefits both the company and its employees.
By purchasing a group life plan, companies are able to secure costs for each individual employee that are much lower than if they were to purchase an individual policy for themselves.
This also provides an easy way out for companies to abide by the laws of some countries.
For example, in Nigeria, according to the pension act 2014, if an employee dies in service, the employer must pay 3 times the employee’s annual salary to their stated beneficiary. This can be a huge amount of money depending on the salary of the employee.
But by paying a calculated premium to an insurance company, the insurance company bears this burden if any loss of life occurs.
Another major benefit of group life insurance is the opportunity to insure higher-risk individuals, like those working in gas plants or power plants. This shifts the potential death benefit from that organization to the insurance company.
Who Can Take Group Life Insurance
There are two classes of people who can take Group Life Insurance:
- Companies or official employers of labour (who are often mandated by law)
- Non-official groups like clubs and cooperatives (who want a special benefit for the beneficiaries of their members)
Calculating The Rate
Group life insurance rates vary and are dependent upon the age of the members of the group. To have an idea of the premium for group life insurance rates in Nigeria:
Premium = Sum Assured (Total Annual emolument × 3) × Company Rate / 1000
Group life insurance premiums are renewable annually and the condition for claiming a benefit is the death of an employee or member of the insured organization.
This write-up serves informational purposes only. It should not be considered explicit financial or legal advice. Not all information will be accurate. Before making any serious financial decisions, consult a professional.
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