The Office of the Head of Service of the Federation and the Nigeria Police Force have both paid 50 percent premium for their employees group life insurance cover for the current year, BusinessDay investigations have revealed.
The money which forms part payment for the remaining six months of the year becomes effective August 1, 1015.
Group life insurance is stipulated in the Pension Reform Act. Section 9 (3) of the Pension Reform Act 2004 as amended in 2014 stipulates that every employer (in the public and private sector) to which the Act applies, must maintain a Life Insurance Policy in favour of the employee for a minimum sum amounting to three times the annual total emolument of the employee.
The policy provides cover to the insured against death and the insurance cover is mandatory for all employees, as long as they are in employment. This means that the policy provides for the payment of the sum assured in the event of the death of a member of the scheme from any cause, natural and accidental.
Wale Bamore, managing director/ CEO, Royal Exchange Prudential Life, who confirmed the payment to insurers in a telephone conversation, said that is the latest development on group life.
Bamore said “Its going to take effect from August because we cannot backdate, we are guided by the policy of ‘No Premium No Cover’.
Val Ojumah, managing director, FBN Insurance, also confirming the development, said “We are happy that it came eventually, given how the economy started this year.
“It’s a good development because if it did not come, there is nothing anybody could have done.”
Ojumah however expressed optimism, believing that coming year would not happen like this since the government would have settled down properly.
According to the guidelines for life insurance policy for employees, jointly issued by the National Insurance Commission (NAICOM) and National Pension Commission (PenCom), the employer is required to fully bear all costs in relation to procurement of this policy, and this shall be in addition to the contributions to be made by the employer to each employee’s Retirement Savings Account.
Paschael Egerue, managing director/CEO, Enterprise Insurance Brokers, said the claims in the last six months would be borne by the government, since there was no insurance cover in place. This is the position of the law on No Premium No Cover, except there is mere consideration, which is a practice in insurance.
“But for me, I think the best approach to this for government going forward, is to include insurance premium into the consolidated account.”
This means that whether there is a new budget or not, premium can be paid at the beginning of each year, without having to create a lacuna because there could be a catastrophic loss at any time, Egerue advised.
Life insurance policy involves the payment of a premium to the insured, against the death of an employee, by natural or accidental causes. It is wholly
paid for by the employer and enjoyed by the employee if the death occurs prior to terminal date.
The policy also can provide for accident at work that results in permanent disability, as well as cover for burial expenses by way of extension to the policy. It therefore demonstrates to employees that the employer places a great premium on their lives and contributions to the development of the organisation.