As an employee of the Public Service or private company with 5 or more staff members, you are entitled to a life insurance cover entirely paid for by your employer. According to section 9(3) of the Pension Reform Act 2004 every employer, to which the Act applies, shall maintain Life Insurance Policy in favour of the employee for a minimum of three times the annual total emolument of the employee (recall that Total Emolument = Basic Salary, Housing Allowance + Transport Allowance and where there is no breakdown, 50% of the total remuneration package). This means that for an employee whose Annual Total Emolument is =N=1.2 Million, his employer must insure his life for a minimum of =N=3.6 Million.
How does this Life Insurance Operate?
It is a policy which primarily gives 24-hour death cover. This means that it pays the stipulated amount in the event of an insured employee's accidental or natural death. However, the ACT introduces another twist to it by making the Policy pay the stipulated amount when an employee disappears for up to 12 months. Summarily, the 3x annual total
emolument becomes payable when:
i) an insured employee dies
ii) an insured employee disappears for up to 12 months
How is the benefit paid?
For an insured life insurance scheme, in the event of an employee's death, the benefit (known as 'sum assured' or 'death benefit') is paid by an insurer into the deceased employee's Retirement Savings Account which can only be accessed by the next-of-kin nominated by the employee. Please note that the eployer is expected to notify the insurer of the employee's death and supply some substantiating documents (Medical Certificate of Cause of Death obtainable from the last doctor that attended to a deceased person, Death Certificate obtainable from a Local Government Secretariat, Burial Warrant also obtainable from a Local Government Secretariat, Burial Certificate issued by the officiating clergy at deceased employee's burial, Police Report in the case of death caused by road traffic accident or gunshot as well as deceased employee's Retirement Savings Account details).
In case of an employee's disappearance, it takes a period of 12 months from the first day of disappearance before the death benefit becomes payable. However, aside the other procedures, the death benefit paid must be returned once the disappeared employee is found.
The main objective of this policy is to make financial provision for an employee's dependants in the unfortunate case of his death. For an effective life insurance policy, please talk to an Insurance Broker today.
This is another insurance entitlement of an employee. The Employee's Compensation Act(ECA) which repels the Workmen's Compensation Act 2004 was designed primarily to provide an open and fair system of guaranteed and adequate compensation for all employees (permanent, temporary, contract etc in any form of employment except members of the Armed Forces) or their dependants for death, injury, disease or disability arising out of or in the course of employment and to provide rehabilitation to employees with work-related disabilities as provided in the Act. Unlike the contributory pension scheme, the Employee Compensation is being coordinated and implemented by only the Board of the National Insurance Trust Fund.
Requirements
An employer is expected to contribute 1% of an employee's total monthly payroll into the Fund within the first two years of the commencement of the Act after which each employer shall be assessed and the actual contribution determined in relation to the risk categorization of the class or sub class of the industry such employer belongs.
Compensation
i) The Act provides compensation to any employee who suffers from Mentak Stress, Occupational Diseases and Injuries.
ii) It also provides compensation to employees' dependant in the unfortunate case of such employees' death.
ii) Besides the compensation paid to employees, it provides health care and disability support.
Qualification for Payment
Employees or their dependants in case of death, are expected to inform their employers within 14 days of the occurrence of an event or receipt of information of the occurrence of an event after which the employer informs the Board and local representative of the Board of such occurence. Such employees or their dependants are also expected to file an application for compensation in the prescribed form (see Employees' Compensation Act page 8) within one year of the occurrence of an event.
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