What is a Group Life Settlement Trust?

If a child, a spouse, a life partner, or a parent depends on you and your income, you need a life insurance trust

A. GROUP LIFE INSURANCE

It is a life insurance policy mandated for every employer to maintain on behalf of its employee for a minimum of three times the annual total emolument of the employee. The provisions of the Pensions Reform Act 2014 as well as guidelines jointly issued by the National Insurance Commission and the National Pension Commission provide for this. The employer is mandated to pay premium not later than the date of commencement of the cover.

The new provision of the law makes employers liable for the payment of claims arising from the death of their employees for failing to arrange life insurance for employees.

B. GROUP LIFE SETTLEMENT TRUST (“GLST”)

A GLST has three components. The Settlor is the person creating the trust — that’s you. The trustee you select manages the trust. And the trust beneficiaries you name will receive the trust assets upon your demise.

It is a Trust set up with the Group Life insurance policy (undertaken by the employer on behalf of the employee) as the asset. This allows the employee (Settlor of the policy) to designate the Trust as the primary beneficiary of the life insurance policy. Thus, upon the death of the employee, the insurance proceeds will be deposited into the Trust and held and distributed by the trustees to beneficiaries in accordance with the trust deed.

Most people name their spouse, children and/or grandchildren as beneficiaries of their Group Life Policy. However, if your trust is the beneficiary of your Group Life Policy, ARM Trustees will manage the funds and distribute to your beneficiaries.

C. BENEFITS OF GLST

  • Provides security for your family after your death while providing control over how the death proceeds are invested or distributed to your beneficiaries
  • Provides immediate cash to pay for expenses after death.
  • Gives you maximum control over your insurance policy and how proceeds are used.