Everything You Need to Know About Group Life Insurance

Posted on: 24th Apr 2019

When you work for an organization, you do your best to give your all. Your time, mental and sometimes your physical abilities are all invested in the growth and development of this said organization. But what does your company, firm or institution give you back in return? How do they appreciate all your efforts? Is it in salaries? Wages? Whatever it is, if it doesn’t come with group life insurance, then it’s simply not enough.


What is Group Life Insurance?

Group life insurance is a life insurance policy that ensures that a prescribed tax-free amount of money is awarded to the beneficiaries (families) of employees currently working in an organization or company. It is made available by the employers of the said organization in the case where the employee dies in active service with the policy still active and ongoing.

By law under the Federal Republic of Nigeria, all employers are directed to make available group life insurance for their employees. Any company who doesn’t make provision for this is in complete contradiction of the laws of Nigeria. It is an employee’s right to have group life insurance set up for him or her.


How Does It Work?

Group life insurance should naturally be an automatic benefit as a registered and duly employed staff of a company. When an employee is admitted into an organization, the employer is obligated to offer him or her group life insurance for free. Even if it may only be a small amount as mentioned earlier, it is the law. This is so that a man or woman who spends most of his or her days (sometimes nights) on the job, is able to secure some form of financial safety-net for their families.


Is Group Life Insurance a Sufficient Coverage for my Family?

We have already established the fact that group life insurance is to be awarded for free to employees of an organization. Nonetheless, a careful review of this policy shows that it provides only a small cover for the beneficiaries of an employee. In many cases, this is hardly sufficient a cover for an employee’s family and/or dependents.

Therefore, it is advisable to take on a life insurance plan targeted at securing the financial future of your beneficiaries. While the importance of group life insurance cannot diminish in any way, it is also pertinent to ensure that whatever coverage you have in place actually covers if not wholesomely, at least more than partially covers your loved ones, family/beneficiaries.

However, note that there is such a thing as ‘supplemental life insurance’ whereby you are able to buy additional insurance in order to improve your life insurance plan under the group life policy that you must have accrued in the workplace. Statistics reveal that nearly 45% of people who have obtained life insurance in as little as less than 5 years ago, did so through group life insurance provisions made available to them in groups such as companies, churches and a host of other entities or associations.

In conclusion, group life insurance should be your barest form of life insurance as an individual. This is because it also comes with its limitations. For example, one may not remain in a particular organization for the entirety of his or her career and the moment you jump ship, your group life policy becomes invalid. This is not to say that it is impossible to break out of group insurance and convert to an individual one, but at what cost!?! Attempting to do this will attract a significant cost implication.

Despite some of the cons of group life insurance, the fact still remains that it is highly recommended by law and for good reason. It is the smallest form of life cover an organization could possibly make available to its employees for all their effort and commitment.

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