Existing cover takeover — up to $2m death and TPD, $20k IP

The Individual Transfer Option, also commonly called takeover terms, is one of the most important features of the SMSF Master Insurance Plan. It lets you move existing life, TPD, or income protection cover from any previous Australian insurer or super fund into the Plan without medical underwriting, up to defined dollar limits. It’s the feature that makes consolidating cover into an SMSF practical for anyone who isn’t young and perfectly healthy, and it’s a big part of why people use SMSF Insurance to consolidate.

Here’s why this matters: without the transfer option, anyone moving between insurance arrangements would start from scratch. New medicals, new health questions, potentially new loadings or exclusions if anything’s changed since their original cover. With the transfer option, your existing underwriting protection comes with you. And if you’ve developed any health issues over the years, they stay on the same accepted terms they were already on.

The limits (and what they really mean)

Two dollar limits apply under the Individual Transfer Option:

• Death only or Death and TPD cover— matched up to $2 million per member
• Income Protection— matched up to $20,000 per month

Each limit is per member. If you’ve got $1.5 million in life cover and $15,000 per month in income protection, both can come across in full under the transfer option — each is within its respective limit.

If you’ve got more than the limit on either type, the portion within the limit transfers under the option and the bit above gets standard underwriting. For example, $3 million of death cover would have $2 million move at matched terms and the extra $1 million assessed normally. The transfer portion isn’t affected by the underwriting outcome on the excess.

Who can use the transfer option

The eligibility conditions:

• Aged under 60 at the time of application
• Gainfully employed and physically capable of at least 30 hours of work per week
• Existing cover accepted on terms no worse than +100% extra mortality and no more than two exclusions
• Not currently entitled to claim — or already receiving — a TPD or income protection benefit from any other policy
• Not terminally ill with a life expectancy of less than 12 months
• Able to provide a recent statement, letter, or email from your existing fund or insurer — dated within the last 30 days — confirming your current cover details
• Willing to cancel your existing cover (the new cover replaces it; you can’t run both)

What counts as “existing cover”

To use the transfer option, your existing cover needs to be:

• Currently in force when you apply — recently cancelled or lapsed cover doesn’t qualify
• Held under an Australian insurance arrangement — typically a retail life insurance policy, an industry super fund, an employer-sponsored super arrangement, or another group life policy
• Documented with a recent statement showing what you’ve got
• Held by the same person who’s applying for the new cover — transfer can’t be used to move cover between people

What gets preserved

This is the heart of it. Under the Individual Transfer Option, the new SMSF Master Plan policy preserves:

• Your underwriting decisions, including pre-existing conditions disclosed and accepted on your original cover
• Your level of cover, up to the transfer limits
• Your waiting period and benefit period for income protection (rounded to the closest available options under the Plan: 30, 60 or 90-day waiting periods, and 2-year, 5-year or to age 65 benefit periods)
• Any underwriting decisions about your existing cover that are within the +100% extra mortality / two exclusions threshold

If you developed something serious between your original underwriting and now — high blood pressure, a back injury, a chronic condition — and you’ve been worried about what would happen if you ever had to switch insurers, this is your answer. The Individual Transfer Option means those developments aren’t reassessed. The original underwriting is what counts.