Moving life insurance into your SMSF isn’t a direct policy transfer, but the Individual Transfer Option under the SMSF Master Insurance Plan achieves the same result, letting you bring your existing cover across at matched underwriting with no new medicals.

One of the most common queries we come across: “I’ve just set up my SMSF. Can I bring my existing life insurance across?”

The short answer is yes, you can keep your cover.

The slightly longer answer is that it doesn’t quite work the way most people expect.

Your existing life insurance policy can’t literally be picked up and moved into your SMSF. That’s not actually how Australian insurance law works. But what we can do is something that has the same practical effect: set up a new cover under the SMSF Master Insurance Plan that matches your existing underwriting. You keep your terms, you don’t need new medicals, and your cover continues without a gap. We call this Individual Transfer Option, and it’s one of the main reasons people use SMSF Insurance to consolidate their cover.

Why you can’t just transfer the policy itself

Your current life cover is a contract between you (or your previous super fund) and the insurer. Under Australian law, you can’t just hand that contract over to a new owner. The policy has to be cancelled and a new one issued, so there’s no way around that part.

SMSFs also have some specific rules. The fund itself has to be the legal owner of any insurance held inside it. Premiums for cover inside super come from the fund’s reserves. And the trustee receives any claim payment. So even if you could transfer a personally-owned retail policy across, it wouldn’t sit properly inside your SMSF anyway.

How takeover terms actually work

Rather than putting you through the whole medical process again, AIA Australia, the insurer behind the SMSF Master Insurance Plan, accepts the underwriting from your existing cover and applies it to a new policy issued through the Plan. No new medicals. No new waiting periods on income protection. No surprises if your health has changed since your original cover was issued.

The maximum amounts you can transfer this way are:

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

If you hold more than that, the portion within the limit moves across under transfer terms and any excess goes through standard underwriting. The transfer portion isn’t affected by the underwriting outcome on the rest.

Who can use Individual Transfer Option

To bring your cover across under the Individual Transfer Option, a few conditions need to be met:

  • You’re aged under 60 at the time of application
  • You’re gainfully employed and physically capable of at least 30 hours of work per week
  • Your existing cover was accepted on terms no more restrictive than +100% extra mortality (a doubling of standard premium) and no more than two exclusions
  • You’re not currently entitled to claim — or already receiving — a TPD or income protection benefit from any other policy
  • You’re not terminally ill with a life expectancy of less than 12 months
  • You can provide a recent statement, letter, or email from your existing fund or insurer — dated within the last 30 days — that confirms your current cover details

That “gainfully employed” requirement matters because AIA is accepting your existing underwriting rather than reassessing your current health. They need assurance you’re still functionally capable of doing your job. If your health has changed since your original cover was issued, even significantly, the transfer still works, because it’s the original underwriting being matched, not your current health.

What carries across

Under the Individual Transfer Option, the new policy preserves:

  • How premiums under the SMSF Master Insurance Plan’s group rates compare to what you’re paying now
  • Whether your SMSF has the liquidity to pay premiums from its reserves for cover held inside super — particularly if most of your fund is in property or other illiquid assets
  • Whether the new cover meets your actual protection needs, especially if you’re considering adding cover types you don’t currently have
  • Your obligation as a trustee to consider insurance for members — bringing existing cover across is one way of satisfying that obligation, and the decision should be documented in your investment strategy

Where your existing waiting period doesn’t exactly match what’s available under the SMSF Master Insurance Plan (which offers 30, 60 or 90-day waiting periods), it’ll be rounded up to the next longest one — a 45-day waiting period becomes 60 days, for example. Same for the benefit period, except it rounds the other way: if your existing benefit period isn’t available, it rounds down to the nearest one (2 years, 5 years, or to age 65 are the options).

What may differ

Some product-specific things follow the new policy rather than your old one. If your existing cover had an exclusion that comes across, AIA’s specific exclusion wording will apply. Premium rates and any loadings will follow AIA’s rating structure rather than your previous insurer’s. Occupational classifications use the SMSF Master Insurance Plan’s own framework. None of these are usually deal-breakers — they’re just how the new policy operates.

The process, step by step

  • Step 1 — Get a quote — Quotes through SMSF Insurance are instant. You can see what your new cover will cost before you commit to anything.
  • Step 2 — Complete the application — Including the Individual Insurance Transfer form, which is what tells AIA you want your existing cover matched.
  • Step 3 — Provide your existing cover details — A statement, letter, or email from your current insurer dated within the last 30 days, showing your cover level and terms.
  • Step 4 — AIA reviews and accepts — Generally faster than standard underwriting because there are no medicals.
  • Step 5 — Cancel the old cover — Your new cover starts on the later of two dates: AIA’s acceptance of your application, and the cancellation of your existing policy. So you cancel the old one once you know the new one is locked in.

A few things to think about before you start

  • How the premiums under our group cover compare to what you’re paying now (often noticeably less because of the wholesale group pricing)
  • Whether your SMSF has the liquidity to cover premiums from its reserves — particularly important if most of your fund is in property or other illiquid assets.
  • Whether the new cover meets your actual protection needs, especially if you’re considering adding cover types you don’t currently have.
  • The investment strategy obligation — as trustees, you need to consider insurance for your members and document the decision. Bringing cover across is one way to satisfy that obligation.
Ready to bring your cover across?

Through SMSF Insurance, the Individual Transfer Option makes moving your life cover into your SMSF as smooth as it can be. Match your existing underwriting, skip the medicals, get going in minutes.

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Quotes for SMS Life Insurance are instant, and you can buy SMSF Life cover securely online.