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The short answer
Section 4(5) of the Pension Reform Act 2014 requires every employer to maintain a group life insurance policy for all its employees, with cover of at least three times each employee's annual total emolument. PenCom also requires the policy certificate to be displayed in a visible place on the employer's premises. The premium is the employer's cost and is not deducted from staff pay.
What the rule says
PenCom's notice to employers on compliance with the Pension Reform Act (PRA) 2014 puts it in two sentences: under section 4(5), "every employer shall maintain a Group Life Insurance Policy (GLIP) in favour of all employees", and the policy "should be a minimum of three times the annual total emolument of the employees." Section 5.5 of PenCom's Revised Guidelines on GLIP adds that the employer must display a copy of the policy certificate "in a conspicuous place within its premises."
Group life insurance pays a lump sum to an employee's named beneficiaries if the employee dies while in service. It is separate from the employee's pension: the pension pot (the Retirement Savings Account) belongs to the employee and passes to their beneficiaries in any case, while the life policy adds a further sum on top.
Who it applies to
PenCom's notice uses the words "every employer" and "all employees". The Contributory Pension Scheme itself, according to PenCom's 2023 FAQ, covers private organisations with three or more staff and all tiers of government, with smaller employers and the self-employed using the Micro Pension Plan. In practice:
- If you have three or more employees, treat group life cover as mandatory alongside pension contributions.
- If you have one or two employees, PenCom's notice wording still says every employer. Getting a small-business policy is the safer reading, and it protects your staff's families either way.
- The policy must cover all employees, not only managers. A policy for senior staff only does not meet the rule.
If you are not sure whether your business has to run pension at all, see does a small employer have to do pension.
What "annual total emolument" means for the sum assured
The cover is set by reference to each person's annual total emolument, which in pension practice generally means total pay including allowances, not basic salary alone. If your contracts split pay into basic, housing and transport, base the sum assured on the total and confirm the definition with your insurer and PFA.
| Employee | Annual total emolument | Minimum cover (× 3) |
|---|---|---|
| A | ₦1,800,000 | ₦5,400,000 |
| B | ₦3,000,000 | ₦9,000,000 |
| C | ₦4,800,000 | ₦14,400,000 |
| Total sum assured | ₦9,600,000 | ₦28,800,000 |
What it typically costs
Insurers price group life as a premium rate applied to the total sum assured, adjusted for the age profile, industry risk and size of the group. We found no regulator-published rate and insurers do not post standard tariffs, so the figures below are only an illustration of how the arithmetic works.
Because it is a percentage of salary multiples, the premium rises automatically when you give pay rises or hire. Most policies are annual, so update the staff list and salaries at each renewal and tell the insurer about new joiners as they arrive.
Steps to comply
- Make a list of all employees, their annual total emolument and dates of birth.
- Ask two or more insurers licensed by NAICOM for a group life quote at three times annual total emolument.
- Ask each employee to name beneficiaries in writing and keep the forms on file.
- Pay the premium, collect the policy document and certificate, and display the certificate where staff can see it.
- Diary the renewal date. A lapsed policy means the family of an employee who dies in that gap has none of the cover the law requires.
When a claim arises
The point of the policy is that a grieving family gets money quickly and without a fight. Prepare for that moment before it comes. Keep each employee's beneficiary nomination up to date, especially after marriage or the birth of a child, and know where the policy schedule is kept. When an employee dies in service, notify the insurer in writing as soon as possible, ask for its claim checklist, and help the family gather the documents it asks for, which usually include a death certificate and proof of identity of the beneficiaries. The insurer pays the beneficiaries, not the employer, so the employer's role is to notify, confirm employment and salary, and pass on paperwork promptly.
Separately, the employee's Retirement Savings Account balance is paid out by their PFA under PenCom's rules. The family deals with two bodies, the insurer and the PFA, and it helps if HR gives them both contacts at once.
Common mistakes
- Insuring basic salary only, which can leave the cover well below three times total emolument.
- Forgetting new hires between renewals.
- Deducting the premium from staff salaries. The rule places the duty on the employer.
Group life sits alongside the other employer costs in our first payroll checklist and the pension rules in pension contributions in Nigeria.
Where Pryme fits
A Pryme Business Account's Compliance agent can keep track of renewal dates such as the group life policy and prepare reminders, and the Finance agent can prepare the premium payment for a person to approve.
Questions people ask
Is group life insurance compulsory in Nigeria?
Yes. Section 4(5) of the Pension Reform Act 2014 requires every employer to maintain a group life policy for all employees, with cover of at least three times annual total emolument, according to PenCom.
How much is group life insurance in Nigeria?
There is no published standard rate. Insurers quote a percentage of the total sum assured based on your staff's ages and industry. Get written quotes; for example, 0.3% on ₦28.8 million of cover would be ₦86,400 a year.
Can an employer deduct group life premium from salary?
The duty to maintain the policy is the employer's. Deducting the premium from staff pay is not what the rule envisages.
Is group life insurance the same as pension?
No. Pension builds up in the employee's own RSA. Group life pays an extra lump sum to beneficiaries if the employee dies in service.
Sources
- PenCom: Notice to all employers and employees on compliance with PRA 2014 (group life insurance) · accessed Oct 2026
- PenCom: Frequently asked questions (2023 edition) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.