Life Insurance Law is a social benefit in favor of private sector workers that seeks to provide temporary economic relief to their family members in the event of natural death, accident or permanent disability, regardless of the field carried out by the company. It was created from article 1 of Legislative Decree No. 688, which has been in force since December 5, 1991.
Until 2020, an employee had to wait four years to obtain this insurance. However, Emergency Decree DU No. 044-2019 established that all companies must contract this benefit for their workers from the beginning of the employment relationship. In the following lines, learn about the scope of the Life Insurance Law and find out what the fines are for companies that fail to pay.
What benefits does Life Insurance Law provide?
According to labor lawyer Brian Ávalos, partner of the Payet Rey Cauvi Pérez firm, Life Insurance Law “provides financial support for the family members of a worker who dies due to natural or accidental death or who is permanently disabled. Said benefit must be paid from the date of entry into the payroll.
In addition to these employees, workers from public sector institutions and companies that are subject to the regime of Legislative Decree No. 728 are also entitled to coverage by this insurance. It is important to keep in mind that Life Insurance Law does not imply any expense, since it is covered by your employer and provides protection to employees of all companies, regardless of whether they are large, medium or small.
Life Insurance Law: who are the beneficiaries?
- The heirs are the spouse or cohabitant and their descendants (children)
- If the worker does not have heirs, the compensation will be transferred to his parents and siblings under 18 years of age. To notify his beneficiaries, the employee must provide the employer with an affidavit of heirs.
Life Insurance Law: what are the coverages and how is it calculated?
According to figures from the Superintendency of Banking, Insurance and AFP, the number of workers who have Life Insurance Law is equivalent to approximately 2 million 650,855 people. Of this total number, only 418 have accessed Ley Life Insurance for the contingency of permanent disability and more than 70,000 for reasons of death. That is, 79,389 people have benefited from this insurance, which represents 2.99%.
Despite this low coverage that responds to labor informality in the country, Ávalos explains the amounts of this insurance for workers in private activity:
- Natural death of the worker: 16 remunerations
- Death of the worker due to accident: 32 remunerations
- Total or permanent disability of the worker due to accident: 32 payments
Regarding the calculation, it is done based on the worker’s last remuneration. The only thing that has to be done is to multiply the benefit number (16 or 32 insurable remunerations) by the employee’s gross salary. It is worth mentioning that insurable remuneration is that which is recorded in the payroll books and payment receipts, even if the amounts are variable. These do not include bonuses, shares, vacation compensation and other payments that are not made monthly.
What happens to companies that fail to pay this benefit?
According to labor lawyer Brian Ávalos, companies are required to register the Life Insurance Law contract with the Ministry of Labor within a period of 30 days. However, the National Superintendency of Labor Supervision has been issuing circulars in response to non-compliance with this provision by employers.
Given the omission to contract said insurance, The violation is classified as serious and the fine for each worker amounts to 1.57 UIT, equivalent to S/8,085. “If a company has 50 workers and does not contract Life Insurance Law, the fine would be S/400,000,” he explained.
In this way, the penalty will increase according to the number of workers. If the company has 1 to 10 employees, the penalty will be S/8,085, and the range will successively increase from 11 to 25, from 26 to 50, from 51 to 100, from 101 to 200.
Source: Larepublica
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