Businesses are deliberate about protecting their physical assets. They insure office buildings, vehicles, equipment and other valuable assets because replacing them after an incident happens can be expensive.
Yet the people who operate those assets, serve customers, make decisions and keep businesses operational can sometimes get little to no protection, specifically with insurance.
Employees carry institutional knowledge, manage relationships, solve problems and create the value that keeps a business moving. When an employee dies, the company loses more than a position that needs to be filled.
It may lose years of expertise, client relationships, technical knowledge and leadership. For the employee’s family, the effect is more significant and transcends emotional turmoil.
Obligations such as school fees, rent, loans, household expenses and more that do not cease when income does. Group life insurance can contribute immensely to filling this gap, making it more than a corporate benefit. It becomes a financial safety net.
Protection Is a Corporate Responsibility
Group life insurance is not simply a good-to-have employee benefit. It is a regulatory requirement. Under the Pension Reform Act 2014, employers are required to maintain a group life insurance policy in favour of each employee, with a minimum benefit of three times the employee’s Annual Total Emolument (ATE).
The requirement sits within the broader Contributory Pension Scheme framework. PenCom’s Revised Guidelines on Group Life Insurance also reinforce the minimum insurance cover of three times annual total emolument, with the premium paid by the employer.
For organizations with three or more employees within the scope of the Pension Reform Act, group life insurance becomes an important part of their statutory responsibilities.
This creates the baseline of protection for Nigerian organizations. However, companies still must ensure that their approach to insurance for their employees genuinely reflects how they value them.
Employer Perception and Group Life Insurance
The importance of group life insurance goes beyond what happens after a claim is filed and paid. It shapes how employees perceive their relationship with their employer.
Globally, many people consider more than a fair salary when assessing an organization. They consider opportunities for growth, workplace culture, flexibility and the benefits that are an indicator of an employer’s interest in their wellbeing and future.
Knowing that their employer has a financial haven in place for their families can provide an important sense of financial security for several employees, especially in Nigeria. Therefore, having group life insurance benefits employers reputationally.
How Are Businesses Affected?
When an experienced employee passes away, the company must manage the immediate operational impact.
Responsibilities and projects must be reassigned, clients may need to be informed and reassured, and the process of recruiting and training someone new must begin.
Some of these costs may be trackable on a spreadsheet, but the core loss to businesses is the institutional knowledge that cannot be transferred by merely filing a vacancy.
This reinforces the fact that although group life insurance does not eliminate the operational downside of an employee passing away, it is an essential part of a broader risk management framework that helps an organisation prepare for such occurrences.
As businesses try to adjust to the changes triggered by an employee’s passing, the payout from the organization’s group life policy may be highly impactful in helping the deceased employee’s family do the same.
An Indicator of Excellent Organizational Culture
Companies with a sound governance and culture view employee protection as a crucial part of employee protection. Having and effectively managing an active group life insurance policy is a vital part of this.
They go the extra mile to ensure that their employees understand the policy that protects them, they maintain accurate employee and beneficiary information, and they train HR managers to efficiently file and manage insurance claims for employees.
As the workforce at an organization evolves, its leadership have the responsibility of regularly reviewing their group life insurance cover for sufficiency. This eliminates the chances of difficulties in filing a claim.
The Job Market Wants More Protection
In today’s global workforce, employee expectations and responsible business practices are more intertwined than they have ever been.
Employers are competing for talent in a job market with individuals who are not fixated on huge salaries and are optimizing for employment at organizations with benefits that will support them and their loved ones if life takes an unexpected turn.
Group life insurance is one of those benefits. It protects the families of employees against one of the most devastating changes a household can experience; the passing of their breadwinner.
Through this policy, employers acknowledge the responsibilities its people carry outside of work, providing a structured plan for an occurrence that can leave families and businesses vulnerable at various degrees.
In Nigeria, this will make organizations view group life insurance as more than a regulatory obligation, but as an investment in their employees and the financial resilience of their families.
Coronation Life Assurance is committed to supporting organizations of all scales in protecting their employees and being compliant. To learn more about our group life insurance and the other products we offer, email us at info@coronationinsurance.com.ng or call 02-01-2275475 | 02-01-2275476.
Explore more articles from Coronation Life Assurance at https://coronation.ng/insights/
