How is group life insurance calculated Nigeria?
Asked by: Mr. Donny Kihn | Last update: February 11, 2022Score: 4.3/5 (4 votes)
The Pension Act specifies that the benefit of group life insurance to employees is “three times the annual total emolument of the employee.” Total emolument here means, “total sum of basic salary, housing allowance and transportation allowance.” The benefit comes to 300 percent of the annual total emolument.
How is group life insurance premium calculated?
Group Term Life Insurance is calculated as the taxable cost per month of coverage and is calculated by multiplying the number of thousands of dollars of insurance coverage (figured to the nearest tenth) less 50,000, by the cost from the group insurance table.
What percentage is group life insurance in Nigeria?
OPERATIONAL TERMS
6.1 The sum insured for the purpose of Group Life Insurance shall be at the minimum 300%ofthe gross annual emolument.
What is the cost of coverage based on for group life insurance?
Another aspect of group underwriting that differs from individual insurance is that the cost of the coverage is based on the average age of the group and ratio of men to women.
How is group benefit income calculated?
Taxable group life insurance is calculated as follows: Step 1. (Annual TGL gross*) x 150%) - 50,000 = Calculate taxable coverage Step 2. (Taxable coverrage/$1,000) x age rate = Imputed Income Step 3. Multiply the amount arrived at in Step 2 by 12 and divide this result by the number of payroll periods in the year (26).
How to Calculate Group Life Insurance
How is group term life imputed income calculated?
If an employee receives more than $50,000 of employer-provided group term life insurance, then the cost of the insurance in excess of $50,000 {minus any amounts paid post-tax by the employee) is included in the employee's gross income. This is referred to as "imputed income."
Is group life insurance taxable?
The cost of employer-provided group-term life insurance on the life of an employee's spouse or dependent, paid by the employer, is not taxable to the employee if the face amount of the coverage does not exceed $2,000. ... The entire amount is taxable, not just the amount that exceeds $2,000.
What is GTL salary?
GROUP TERM LIFE (GTL)
What is group life insurance in Nigeria?
Group Life Insurance is a company scheme for a group of people. In Nigeria, this life insurance is compulsory by law. Basically, it caters to these groups to take out a policy for a minimum of 3x the total employee annual salary. The group of people is usually not less than 5.
What is the difference between group life insurance and term life insurance?
Group life insurance is where a single contract can provide coverage to a group of people, or its employees. ... For this reason, many people buy an individual term life insurance policy to supplement the coverage they receive through work.
Is group life insurance compulsory in Nigeria?
Group Life Assurance Policy Is Compulsory By Virtue Of The Pension Reform Act 2004. Section 9 Subsection 3 Of The Act Requires Employers To Maintain Life Insurance Policy Or Death-inservice Benefit Scheme In Favour Of Their Employees For A Minimum Of (3) Three Times The Annual Total Emolument Of The Employees.
What are the typical types of group life insurance coverage?
There are three basic types of group life insurance: group term life, group universal life and variable group universal life. The most common form of group life insurance is group term life. This is typically provided to the employees by the employer in the form of a 1-year annually renewable term insurance policy.
Who is the beneficiary in group life insurance?
A beneficiary is the person or entity you name in a life insurance policy to receive the death benefit. You can name: One person. Two or more people.
Is GTL based on age?
Employers must impute income for the entire year based on the employee's age on the last day of the calendar year. ... An employee who will reach age 50 by the end of the calendar year has $175,000 in GTL coverage paid for by the employer.
Is GTL taxable?
Group term life insurance (GTL) is a common benefit provided by employers. ... Your employer may pay the premiums for this coverage, rather than passing them on to you. Group term life insurance becomes a taxable benefit when the coverage amount exceeds $50,000.
What are the types of group insurance?
- Group Life Insurance.
- Group Health Insurance.
- Group Personal Accident Insurance.
- Group Travel Insurance.
Can you cash in a group life insurance policy?
Group term life insurance carries no cash value and is intended solely as a supplement to personal savings, individual life insurance or social security death benefits. ... You cannot cash out on a policy that carries no accrued savings, whether it is a group policy or an individual one.
Does Group life insurance have cash value?
Group Term Life Insurance does not have a cash value; however, the annual premiums are usually lower than those types of insurance with cash values.
Is group life compulsory?
Basically, Group Life Insurance Policy under the PRA is a statutory obligation anchored on public policy. Thus, it cannot be waived, ignored or avoided.
How does a group life insurance policy work?
Answer: Group life insurance is a type of life insurance in which a single contract covers an entire group of people. Typically, the policy owner is an employer or an entity such as a labor organization, and the policy covers the employees or members of the group.
Does Group life insurance end at retirement?
Since a group term is linked to ongoing employment, the coverage automatically ends when an individual's employment terminates. Some insurance companies do offer the option to continue coverage by converting to an individual permanent life insurance policy.
What are the benefits of group life insurance?
Group life insurance can be beneficial because it features: Income tax-free death benefit. Minimal or no medical underwriting. The potential to add additional coverage for dependents.
What are GLI imputed earnings?
Imputed income is the value of the income tax the Internal Revenue Service (IRS) puts on group-term life insurance coverage in excess of $50,000. In other words, when the value of the premiums paid for by employers becomes too great, it must be treated as ordinary income for tax purposes.
What GTL means?
GTL is an acronym that defines a daily ritual of gym, tan, laundry. It originated on the reality television show The Jersey Shore, and is occasionally alluded to in the online “manosphere” or the world of men focused on picking up women.
How is imputed income calculated?
One simple way to do the calculation is to determine the difference between your company's cost of an employee-only monthly premium and the cost of an employee-plus-one monthly premium. Multiply that number by 12 and you will get your total.