Life Assurance and Pensions
Life products
Term assurance pays only on death within the term and has no investment element. Whole life covers the entire lifetime and accrues surrender value. Endowment pays on death or on survival to maturity. Annuities convert capital into income. Investment-linked and universal policies shift investment risk to the policyholder. Group life and mortgage protection are term variants.
Features and traps
Life assurance is not indemnity: the sum assured is paid in full however many policies exist, so subrogation and contribution do not apply. Insurable interest need exist only at inception. Standard features include 30-day days of grace, reinstatement of lapsed policies on evidence of health, surrender/non-forfeiture values, policy loans, assignment and nomination, and a suicide clause limiting early death claims. Non-disclosure of health facts allows avoidance or a reduced claim; a nomination is not an assignment.
Pensions
The Pension Reform Act 2014 established the contributory scheme: employer minimum 10% and employee 8% of monthly emoluments into a Retirement Savings Account held by a Pension Fund Administrator and invested by a Pension Fund Custodian, all regulated by PenCom. Contributions must be remitted within seven working days of salary payment. Employers with 15 or more employees must maintain group life assurance of at least three times annual total emoluments. Voluntary and micro pensions are also permitted.
Rule of thumb
If a question mentions “replacement cost”, “betterment” or “salvage” it is general insurance; if it mentions “sum assured”, “maturity” or “beneficiary”, indemnity language is the trap.
Annual salary ₦2m → mandatory group life cover = ₦6m.