Under our compulsory superannuation system, most Australian workers have a Superannuation Account via their employer and also, as a result, have some form of life and disability insurance.
In some cases that cover lapses when you change jobs. Sometimes they lapse unless you specify that payments are made for the premiums form your accumulated balance. In some cases the insurance can lapse when you leave Australia or no longer are considered a permanent resident without agreement for the insurer.
In a recent case before the Superannuation Complaints Tribunal, the Complainant (the Deceased Member’s mother) lodged a complaint with the Tribunal that the decision of the Trustee and the Insurer to deny payment of the insured component of the Deceased Member’s death benefit due to an “exclusion clause” contained in the insurance policy was unfair or unreasonable. The Insurer and Trustee declined the Complainant’s claim for the insured part of the death benefit on the basis that the Deceased Member was not a permanent Australian resident and was not therefore covered by the Worldwide cover provided by the Insurer. The resolution sought by the Complainant, was the payment of the insured death benefit.
The Deceased Member was born in New Zealand and moved to Australia, where he worked as a long haul truck driver with the Employer. He was enrolled in the fund by the Employer and was provided with automatic life insurance cover of $250,000. The Deceased Member continued to work for the Employer until he returned to New Zealand and died a little over 2 months later while still in New Zealand. The Insurer and Trustee declined the Complainant’s claim on the basis that the Deceased Member was not a permanent Australian Resident and was not therefore covered by the worldwide cover provided by the Insurer.
There was some argument between the Insurer and the Complainant as to what was the relevance of the fact that the Deceased Member was a New Zealand citizen, and that there was no definition of “permanent Australian Resident” contained in the Policy.
The Insurer also attempted to state that the provision of the Product Disclosure Statement to the deceased member when he first signed up was enough notice as to the intricate details of the Insurance Policy Wording.
The Tribunal considered that the decisions of the insurer and the Trustee to reject the Complainant’s claim for payment of the insured component of the Deceased Member’s death benefit were not fair and reasonable in their operation in the circumstances. The Tribunal determined to set aside the decision under review and substitute its own decision that the Insurer pay the insured amount to the Trustee together with interest.
There is generally considerable movement between Australia and New Zealand of workers who have a balance in their Super Account and an Insurance component attached. It would be very prudent in all cases where leaving Australia to go back home to NZ to check that the insurance cover does not lapse.