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Reasons why 31 States Have No Life Insurance Policy for their Employees

Thirty one states in Nigeria are yet to put in place Group Life Insurance Policy for settling claims arising from the death of any of their employees, a document obtained by Daily Trust has revealed.

The Section 5 of the Pensions Reform Act of 2014 (PRA, 2014) requires every employer to maintain a Group Life Insurance Policy in favour of each employee for a minimum of three times the annual total emolument or pay of the employee and premium shall be paid not later than date of commencement of the cover.

The policy can be bought in favour of employees from any insurance company licensed to do so by the National Insurance Commission.

But analysis of the document revealed that only Lagos, Osun, Ekiti, Niger and Rivers States have put in place the policy for their employees.

However, Rivers State’s policy expired in June, 2013 as the policy is expected to be renewed every year.

While Ogun, Oyo, Ondo, Kaduna, Zamfara, Kebbi, Sokoto and Kogi states have started transiting to the Contributory Pension Scheme (CPS), the starts are yet to put in place the Group Life Insurance Policy.

Nasarawa, Delta, Bayelsa, Edo, Akwa Ibom, Imo, Anambra, Enugu and Taraba have also not put in place the policy.

Meanwhile, it could be recalled that Daily Trust had previously reported that Jigawa and Kano had adopted the Contributory Defined Benefit (CDB) pension scheme and it is not clear whether or not the policy is required under the scheme but the states are yet to put in place the policy for their employees.

The reason Katsina, Benue, Kwara, Plateau, Cross River, Abia, Ebonyi, Bauchi, Borno, Gombe and Yobe States have not put in place the policy as required by the PRA, 2004 (now amended) may not be unconnected to the fact that their respective State Houses of Assembly have not passed the bill to enact the law backing CPS. Adamawa State, which the National Pension Commission (PenCom) reported as the only State which has not taken any action on the CPS, has also not made provisions for the policy.

The implication of states dragging foot on the Group Life Insurance Policy is that in case of eventualities, families of deceased employees of these states may have difficulties accessing their claims.

The policy provides that in the event of the death of any employee, his next of kin will be given a relief three times the annual total emolument of the deceased, in addition to the normal entitlement of the deceased employee after service.

Interestingly, the PRA, 2014 unlike the PRA, 2004, has tried addressing the situation through a stern statement that has made it compulsory for employers to put in place the policy.

The PRA, 2014 provides in section six that “where the employer failed, refused or omitted to make payment as and when due, the employer shall make arrangement to effect the payment of claims arising from the death of any staff in its employment during such period.”

On the benefits of establishing the policy, Mansard Insurance Plc, one of the insurance companies that provides the policy, stated that the policy “relieves an employer of spontaneous financial commitments in the event of an employee’s demise, gives the employee peace of mind knowing that adequate arrangement has been made to provide financial security for the family in the unfortunate event of his/her demise and at the same time frees the society of threats associated with displaced family members arising from the demise of a breadwinner in the family.”

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