5.1 The structure of group life insurance

Group life insurance involves a policy owner – commonly an employer or superannuation trustee – holding a policy on behalf of a defined group of individuals.

Under an employer group scheme, an employee’s life is insured. The employer is the policy owner and can be the agent of the life insured for the purposes of the insurance.[1]

Superannuation fund schemes are structured on the basis that the life insured is a member and beneficiary of the trust fund and the policy owner is the trustee of the fund.[2]

In both schemes, it is the employer or trustee, as the policy owner, and not the life insured, who enters into the contract, is obliged to pay the premium, has standing to claim and is entitled to receive the benefit amounts paid by the life insurer.[3]

[1] Background Paper No 28, 2 [2.2]. See also the definition of ‘group life contract’ in Insurance Contracts Act ss 11(1), 32, on misrepresentation and non-disclosure in that context.

[2] Background Paper No 28, 2 [2.3]. See also the references to ‘superannuation or retirement scheme’ in Insurance Contracts Act ss 23, 26, 48A. This description, from Sutton on Insurance Law, was cited with approval in Montclare v Metlife Insurance Ltd [2015] VSC 306, 18 [61].

[3] Background Paper No 28, 2–3 [2.4]; Erzurumlu v Kellogg Superannuation Pty Ltd [2013] NSWSC 1115, 22–3 [52]–[55].