The law mandates coverage. Section 4(5) of the PRA 2014 requires that “every employer shall maintain a Group Life Insurance Policy in favour of each employee for a minimum of three times the annual total emolument of the employee, and premium shall be paid not later than the date of commencement of the cover.” Section 4(6) addresses situations where employers fail to pay premiums, mandating that they “make arrangement to effect the payment of claims arising from the death of any staff in its employment during such period.” Section 8(1) further provides that, “where an employee dies, his entitlements under the Life Insurance Policy maintained under this Act shall be paid by an underwriter to the named beneficiary in line with Section 57 of the Insurance Act.”
Despite these clear regulations, compliance remains uneven, leaving families vulnerable.
“When workplace accidents or unexpected deaths occur, families are frequently left with little support, while employers facing financial strain struggle to provide meaningful compensation,” said Chika Onwunali, partner at Premium Debate. “Yet, when group life insurance is in place, the difference can be life-changing for those left behind.” He emphasized that ignoring group life insurance for staff has significant consequences, noting that its transformative impact highlights a critical gap between regulation and reality.
The real-life importance of insurance is illustrated by Adetola Adegbayi, founder of Mutual Aid Specialist Limited. Her perspective comes not just as an industry professional but from personal experience.
In one of her businesses, the company had implemented a group life and personal accident insurance policy covering full-time and outsourced staff. Tragedy struck when, over a weekend, a staff member off duty went to a petrol station to help someone with fuel and was hit by a trailer, losing his life.
“The loss was heart-breaking, but the insurance revealed its often-overlooked power,” Adegbayi said. Thanks to the policy, the employee’s family received a payout of N4.5 million. She explained, “For the family, it was both shocking and deeply meaningful. They had not imagined that such financial support would be available.”
Without insurance, she noted, the story would have been very different. Many organizations provide only discretionary support, covering funeral expenses and small financial assistance—typically N50,000, N100,000, or at most N200,000—which is rarely sufficient to support a grieving family long-term. Such payments are also unpredictable and can strain limited company resources.
“Group life insurance changes that equation entirely,” Adegbayi explained. “Instead of relying on discretionary contributions, companies can transfer financial risk to an insurer for a relatively modest premium. This ensures employees and their families are meaningfully protected, while also safeguarding the company’s finances.”
In the case she described, the employee had not formally designated a beneficiary, so the payout went to his sister. “Like many in similar situations, she struggled to believe that her brother’s life could translate into such tangible financial support,” she said. Adegbayi stressed that insurance is more than a financial product; it is a tool for dignity. “It ensures that even in tragedy, families are not left completely vulnerable,” she explained.
Adegbayi believes companies and state governments have a crucial role to play in changing the narrative. By adopting group life insurance, they are not only protecting employees but also making a smart financial decision. She added, “It is about more than compliance or cost; it is about responsibility, foresight, and the kind of support that truly makes a difference when it matters most.”
Group life insurance is a significant segment of Nigeria’s life insurance market, contributing 26 percent of total life premium as of the third quarter of 2024. Individual life and annuity products dominate market growth, but regulatory mandates under the PRA 2014—requiring employers with three or more staff to maintain life assurance schemes—along with the heightened awareness of financial risk during the COVID-19 pandemic, have increased its relevance.
At the state level, compliance varies. Eight states—including Lagos, Kaduna, Edo, Osun, FCT, Ekiti, Ondo, and Jigawa—have fully implemented the Contributory Pension Scheme (CPS) or equivalent schemes, which include group life insurance for employees.
Recently, the Lagos State Government disbursed approximately N701 million to 232 families of deceased public servants as insurance death benefits. Some families received up to N15 million. These payments aim to fulfill obligations to workers who died in active service and provide financial support to their dependents.
Experts say broader adoption of group life insurance is not merely a legal obligation but a moral and financial responsibility. Adegbayi concluded, “It ensures that families are not left entirely vulnerable in tragedy and reinforces that foresight and responsibility can make a meaningful difference when it matters most.”