I AM YOUR POLICY

Dear Insured,

You and I have similar purposes in this world.

It is your job to provide food, clothing, shelter, schooling, medicine, and other things for your loved ones. You do this while I lie in your strong box.

I have faith and trust in you. Out of your earnings will come the cost of my upkeep. At times, I may appear to be worthless to you – but some day (and who knows WHEN), you and I will change places.

When you are laid to rest, I will come alive and do your job. I will provide the food, clothing, shelter, schooling, medicine, and other things your family will continue to need – just as you are doing now.
When your work and toil are done, mine will begin. Through me, your hands will carry on.

Whenever you feel the price you are paying for my upkeep is burdensome, remember that I will do more for you and your family than you ever can do for me.
If you do your part, I will do mine.

Sincerely,
YOUR LIFE INSURANCE POLICY



NB: Thanks to Mark Rosenthal for this beautiful piece

Employee's Insurance Rights (2)

Dear esteemed readers,

Life Insurance

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.

Employee's Compensation

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.

Employee's Insurance Rights (1)

Dear esteemed readers,

I am sure that most of us are already aware of certain rights we have as an employee as far as insurance is concerned, still I believe that there is a need to remind ourselves constantly of our insurance entitlements. Who knows? Someone somewhere may be reading about these rights for this first time.

If you are a public servant or an employee of a private company with five or more staff strength, you are entitled to three different personnel insurances:

1) Contributory Pension Scheme

2) Life Insurance

3) Employees Compensation

Let's start with the contributory pension scheme. The Pension Reform Act, 2004 makes it compulsory for all employers in the categories I mentioned earlier to establish a contributory pension scheme for all their employees - permanent or not. Under this scheme which must be managed by a licensed Pension Fund Administrator (PFA), an employee has to open a Retirement Savings Account (RSA) with a PFA of his/her choice and the employer must ensure that a minimum of 15% of the employee's monthly total emolument (basic salary + housing allowance + transport allowance and where there is no breakdown, 15% of 50% of employee's total monthly salary) is paid into his/her (employee's) RSA on a monthly basis. Employer and employees are to contribute this 15% on a 50/50 basis (i.e. 7.5% by the employer and 7.5% by the employee) monthly. Aside this compulsory 15%, an employee may make an additional voluntary contribution of any amount.

The advantages of this scheme aside the traditional purpose of ensuring that employees have something substantial to fall back on at retirement are:

a) employees are at liberty to determine their own fate by choosing the PFA of their choice except for employees who work in big corporations that operate a Closed Pension Fund Administrator;

b) there is seperation between management and custodian of pension funds. The PFAs only manage the funds but the funds are kept by Pension Fund Custodians. 

c) employers have no access and no right to the employees' funds. Only the employee (the RSA holder) and his/her next-of-kin can access the funds. However, in order for the scheme to fulfill its purpose, employees can only access their funds at retirement and part of the funds when they are unemployed for up to six months.

Therefore, as an employee, all you need do is open a Retirement Savings Account with any PFA of your choice. You will be given a unique Personal Identification Number issued by National Pensions Commission (PENCOM). Kindly note that you do not need to change PFA if you change jobs. Your PFA follows you wherever you work.

For contributors to the old Nigeria Social Insurance Trust Fund (NSITF), you can apply for your fund to be trasfered to your chosen PFA. Your PFA will be more than ready to help you sort this out.

There is one thing you should keep in mind though, when opening your RSA please remember to name your beneficiary(ies) in case the 'unwanted' happens.

Making Insurance Work For You (2)

Dear esteemed readers,

For insurance to work properly, we must know that all parties involved (the insured, insurer, insurance broker and other relevant professionals) have roles to play and each party's role cannot be overemphasised. It is not enough to purchase an insurance policy and 'go to sleep'. Rather, we must have a clear understanding of what our responsibilities are and carry them out as diligently as required.

Aside the technical roles enunciated in the first part of this topic, an insured must:

1) Avoid loss from occurring: it is true that you as an insured bought insurance in order to be protected but at the same time, you must do all within your capacity to ensure that the occurrence insured against does not happen! Paradoxical? Not exactly. The truth is your insurance, most often than not especially for non-life insurances, has a limit and once the limit is reached, you are no longer covered. Besides, the number of losses (claims) you experience is a Major determinant of your next premium. Also, there are some policies where the concept of 'excess' and 'deductible' are applicable. In excess, you are expected to fund a claim which is within a particular limit (for instance, for a policy with N20 Million sum assured, an excess of N250,000 may be applied whereby the Insurer will not pay for any loss within N250,000) while in deductible, a certain amount of money is deducted from a loss figure before the insured is paid. This is not cheating but to instill discipline on the part of the insured

2) Have a fore knowledge of the claim requirements: this is very essential as many erroneously believe that Insurance imposes strict documentation in order to avoid paying claims. We must understand that investigations are part of the claims handling process. The loss must be ascertained and one way this is done is by requesting for documents. This is however, not to say that it is right for insurers to be rigid about documents. Please have a good understanding of the documents required to settle claims before they even occur and if possible negotiate. We all know how difficult it is to obtain some documents in this country but when you have negotiated with your insurer (most effectively through an insurance broker), you know the exact documents you need to submit to your insurers in the event of a loss.

3) Report irresponsible insurers: yes, you have the right to report insurers who are not honouring your genuine claims. In the event of an insured loss, your insurers must respond and issue you with a Discharge Voucher (or Discharge Form) few days after completion of all documentations and upon completing the discharge voucher, your claim should be settled in a matter of days. The best bet is to have a prior agreement with your insurer on deliverables and timelines and if your insurer defaults (or even your broker), kindly make a report to the National Insurance Commission for an effective intervention.

Above all, we must always remember that we all are parties to the successful implementation of an insurance policy. Your contributions, comments and questions are welcome.

Making Insurance Work For You (1)

Dear esteemed readers,

Countless times, I have heard people complain about insurance being fraud mostly because they do not get paid when expected. It is not uncommon to find an average Nigeria resenting the purchase of an insurance policy because he believes that it is a share waste of money.

While I acknowledge the fact that a lot of people had fallen victim of failed insurance companies and mediocrity in terms of policy package, ethics and so on, there would be fewer complaints if policy buyers pay more attention to certain details which I am going to share with you here before buying an insurance policy.

Recognize your needs: the most important factor to consider is the purpose you want the insurance policy to serve. You should start by asking yourself these questions: what insurance policy do I need? Why am I buying this Policy? Insurance needs vary from one person to the other. A parent who is looking to sending his toddler daughter to the best university in the world is clearly different from the one who simply wants to ensure that his dependants are well taken care of in the unfortunate but inevitable case of his death. While the former will choose an educational policy with a long-term investment link, the later may choose a term assurance or other similar products.

Talk to an expert: as soon as you recognize your need, the next step is to find the product which best suits your need and which insurer gives the best offer in terms of policy coverage, pricing, financial stamina, flexibility and so on by discussing with an expert. Insurance Brokers have over the years proven to be very efficient in advising prospects of the most suitable insurance policy to buy and the most reputable insurer to patronize. However, ensure that your Broker is duly licensed by National Insurance Commission (NAICOM) and a member of the the Nigerian Registered Insurance Brokers (NCRIB) as we are currently faced with the problem of too many ‘briefcase Brokers’ and few experts.

Understand the Policy Terms, Conditions and Exclusions: Insurance is one profession with its own distinctive jargons which put many off. While there are general terms, there are also specific terms attached to each Policy. Also, just like any other tangible or intangible items sold in the market, there are certain conditions attached to an insurance policy. These conditions must be met before the contract can be valid. For instance, if you insure your bus as a “goods only” carrier, you are not expected to use it to convey fare-paying passengers, you are also expected to always keep your bus in a top shape by ensuring it is serviced and maintained regularly. Perhaps, the most crucial of the three elements with respect to not getting indemnified are policy exceptions. Every insurance policy has certain exclusions which are not covered. For instance, a typical life insurance policy does not cover suicide. However, some exclusions can be bought back by paying an additional premium which is just a fraction of the regular premium.

The terms, conditions and exceptions are contained in what is known as ‘Policy Document’ which is the written contract. From experience, I know that a lot of people are either unaware that they should get this document or simply get it but do not read it. However, reading it and having basic understanding of these terms, conditions and exceptions puts you in a better position to fully take advantage of your insurance policy. Yes, I admit that the policy is full of legal wordings which are not easily assimilated, but part of the benefit of having an Insurance Broker is having your Policy interpreted in a simple manner.

WEY YOUR PARTICULARS?

Dear esteemed readers,

I couldn't think of a better title to give this post considering that most of our law enforcement officers on the roads are more interested in the completion or otherwise of our vehicle papers than their genuineness. This singular fact adds its own quota to the low penetration and appreciation of Insurance in our dear country.

Before you start to think that I'm departing from the main cause of this blog, let me quickly inform you that this post is not about the Police or VIO but it is about a very important aspect of Insurance which is the Third Party Auto Insurance and which incidentally happens to be a statutory Insurance for all vehicle owners.

According to Business Day report of May 16, 2012, fake motor third party insurance is still rampant. This report makes us understand that a lot of people still ignorantly patronize touts at licensing offices for third party auto insurance. This may not be unconnected with the fact that many people do not understand what benefits they can derive from this Insurance product or they simply do not believe in its importance; they believe that they need this policy just to fulfill all righteousness (to avoid Police troubles).

Simply put third party auto insurance gives you cover against all liabilities you may incur in the process of driving your vehicle on public roads. More elaborately, it covers bodily injury plus death to third parties involved in an accident as well as damage to a third party's properties. It also indemnifies the vehicle owner against claimant's legal cost and expenses that may arise there from.

In a country where reckless driving is the order of the day in most parts, you would agree with me that it was a fantastic idea to make this Insurance product compulsory. However, the reality is saddening as most vehicles either do not have at all or they have a counterfeit third party certificate.

A few weeks ago on my way to the office, around the Costain area of Surulere, a truck hit my car while the driver was trying to create a chance for his colleague to maneuver his own truck out of the garage. The next thing was the driver started claiming it was my fault (typical of most liable drivers). I was stunned! But for the presence of a LASTMA official and other motorists who witnessed the event, he could have hit me (call it 'attack is the best form of defense'). At the end of it all, he started apologizing, begging me to 'let the matter die there' as the cost of repairing my damaged car would be deducted from his monthly salary. Can you imagine? After damaging one of my car's doors? I insisted on having my car repaired because I felt that his truck had a third party insurance cover. Alas! The truck had no single cover. A truck often hired by a popular beer brewing company has no third party cover! At the end of it all, the company (owners of the truck) had to pay for the repairs – an expense which should have ordinarily been borne by an insurance company if they had the third party motor cover.

A lot of insurance companies now make it very easy to purchase a third party motor cover. All you need do is buy a scratch card and follow its instructions. But to make the entire process easier plus having all your claims promptly settled without hassles and at no extra cost to you speak to an Insurance Broker today.

Till next time, go get your vehicles properly insured.