A Story of Love, Loss, and the Lessons Learned

The Association of United Professionals (AUP) was more than just a gathering of individuals; it was a family built on shared values and comradeship. One of its most active members, Mr. Kenneth, was a young and vibrant beacon of selflessness and dedication. For years, he had been at the forefront of every association initiative, contributing not just his time but also his resources to uplift the group.

Tragedy struck when Mr. Kenneth was diagnosed with kidney failure. His battle was long and arduous, with regular dialysis sessions draining his family’s savings. Moved by his plight, the association rallied together, raising funds for his treatment. Members opened their hearts and wallets, knowing how much he had given to the group.

Despite their collective efforts, Mr. Kenneth passed away, leaving behind his wife and their five-year-old child, born after 5 years of waiting. His loss was a devastating blow to the association.

When it was time for burial arrangements, AUP took the lead, ensuring Mr. Kenneth received a befitting farewell. After the burial, the focus shifted to his family, particularly his young son. In a remarkable show of solidarity, members pledged to support the boy’s education up to university level.

However, barely a month later, another tragedy struck: another member, Mrs. Eniojukan, passed away suddenly with no sign of ill health. This time, when the association called for contributions to support her family, the response was lukewarm. Many members had already given generously for Mr. Kenneth’s cause and were financially stretched.

The disparity in support created a rift within the association, with some members feeling undervalued. It became clear that the reliance on ad-hoc contributions was unsustainable and divisive.

To address this, AUP’s leadership proposed a solution: group life insurance for all members. This would ensure that in the event of a member’s death, a minimum sum assured would be paid to their family. Members could also opt for higher coverage at their own expense.

A Common Challenge in Associations and Social Clubs

The story of AUP is a common narrative. Many associations struggle with unplanned financial burdens when tragedy strikes a member. Calls for support often come at a time when members are already stretched thin, leading to strained relationships and emotional exhaustion.

This is where insurance solutions become extremely valuable. By insuring members, associations can provide structured, reliable financial support without the stress of frequent calls for contributions.

Available Insurance Policies for Associations

1. Group Life Insurance

1. • Scope: Provides a lump-sum payment to the beneficiary upon the death of a member. This payment can help cover funeral costs and provide immediate support to the family.

1. • Premiums: Affordable and based on the sum assured and group size.
   • Exclusions: Suicide OR death from illegal activities.
2. Group Personal Accident Insurance
   • Scope: Covers accidental death, disability, and medical expenses resulting from accidents.
   • Premiums: Slightly higher for activities with increased risk.
   • Exclusions: Injuries due to reckless behavior, intoxication, or illegal activities.
3. Group Health Insurance
   • Scope: Covers members’ medical expenses for illnesses and hospitalization.
   • Premiums: Dependent on the extent of coverage and group demographics.
   • Exclusions: Cosmetic surgeries, and pre-existing conditions.
4. Contingency-Based Pension (Customized Approach for Associations):

• Additionally, a Pension Scheme can be set up to ensure that members save for both retirement and contingencies such as:

1. • 1. Death of the member (payable to their beneficiaries).
     2. Incapacitation due to illness or disability.
     3. Resignation from the association after a minimum membership period
   • The scheme is administered through a Pension Fund Administrator (PFA), where members make regular contributions.
   • The PFA manages and invests these contributions, growing the retirement fund over time.
   • Members can access their pension benefits upon reaching the designated retirement age or in cases of permanent disability or death, where their beneficiaries are paid out.

FAQs

Q1: How does Group Life Insurance work for associations?
A: The association pays a collective premium to cover all members, and in the event of a member’s death, the assured sum is paid to their family.

Q2: Can individual members increase their coverage?
A: Yes, most policies allow members to opt for additional coverage at their own expense.

Q3: Is Group Insurance expensive for associations?
A: No, group policies are generally cost-effective due to pooled risk among members.

Q4: What happens if a member leaves the association?
A: Their coverage typically ends unless they choose to convert it to an individual policy.

Q5: Are there age restrictions for coverage?
A: Most policies have a maximum age limit, but it varies by insurer.

Q6: Can an association set up a pension scheme for its members, and how would it work with a Pension Fund Administrator (PFA)?

A: Yes, an association can set up a pension scheme for its members by partnering with a licensed Pension Fund Administrator (PFA). Members contribute regularly, and the PFA manages the funds, investing them for growth. Payouts can be structured for retirement, death, disability, or after a fixed contribution period. The association defines the terms, such as contribution rates and withdrawal conditions, while the PFA handles fund management and ensures compliance with pension regulations.

Q7: Can an association bundle multiple insurance policies into one comprehensive policy?

A: Yes, an association can bundle multiple insurance policies, such as Group Life Insurance, Group Health Insurance, and Group Personal Accident Insurance, into a single comprehensive policy for ease of management and cost efficiency. However, a Group Pension Scheme cannot be bundled with insurance policies as it is regulated separately and must be managed through licensed Pension Fund Administrators (PFAs).

Q8: How are premiums calculated for a comprehensive Group Life Insurance policy?

A: Let’s say an association with 1000 members decides to opt for a Comprehensive Group Insurance plan with the listed covers below. The annual premium per member will be ₦12,000

Group Life:       ₦1,000,000 × 0.005 = ₦5,000 (Coverage amount of ₦1,000,000 per member)

Permanent disability: ₦1,000,000 x 0.1% = ₦1,000  (Coverage amount of ₦1,000,000 per member)

Accidental Medical Expenses: ₦100,000 x 1% = ₦1,000 (Coverage amount of ₦100,000 per member)

Critical Illness: ₦1,000,000 x 0.005 = ₦5,000            (Coverage amount of ₦1,000,000 per member)

This means each member would pay ₦12,000 per year and If the premium is broken down into monthly payments, it would be:    ₦12,000 / 12 = ₦1,000 per month.

*Please note that the above premium rates are guides. Your insurance provider will provide rates specific to your association.   

Q9: How can associations make informed decisions when choosing insurance solutions for their members?

A: To make an informed choice, associations should:

• Understand the Scope and Limitations: Ensure clarity on what the policy covers and any exclusions.
• Compare Insurance Providers: Look for providers experienced in serving groups similar to yours and with competitive premium rates.
• Engage Members: Discuss options and gather feedback to select the best fit for your group’s collective needs.

Q10: Guidance for Implementation.

A:       Engage Professional Advisors:

• Consult with a PFA to understand how the pension plan can be tailored to the association needs.
• Work with an insurance broker to design a comprehensive insurance bundle.

• Member Education:
  • Organize workshops with professionals to explain the benefits of the pension scheme and insurance bundle to your members.
• Negotiate Terms:
  • With PFAs: Seek competitive terms for pension contributions.
  • With insurers: Negotiate discounted premiums for the bundled insurance policies based on group size.
• Monitor and Review:
  • Regularly monitor and review the performance of the pension and insurance plans to ensure they meet members’ needs.

Conclusion and Call to Action

The heartbreaking experiences of associations like AUP highlight the importance of planning for the unexpected. Group insurance policies provide a reliable and fair way to ensure every member’s family is cared for, regardless of circumstances.

Don’t wait for tragedy to strike, take action today! Protect your association’s legacy and your members’ families by exploring group insurance options. You can leave a message in my comment section if you wish to learn more about available group insurance solutions specific to your association’s needs.