Our SMSF group life insurance policy offers you a range of fundamental life insurance options which have been specifically designed to be held through your SMSF in an economical, tax-efficient structure.
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 new cover under our SMSF group policy 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 takeover terms, 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 existing life insurance 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.
On top of that, an SMSF has some specific rules. The fund itself has to be the legal owner of any insurance held inside it. Premiums need to come from the fund’s reserves. And the SMSF has to be the beneficiary of any claim. 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
This is where it gets interesting. Rather than putting you through the whole medical process again, we apply for new cover with the insurer using your existing underwriting as the starting point. They look at the terms you already have and match them on the new policy. No new medicals. No new waiting periods. No surprises if your health has changed since you first took out cover.
Under the SMSF Master Insurance Plan we offer, takeover terms apply within these limits:
- Death cover— matched up to $2,000,000 per member
- Total and Permanent Disability cover— matched up to $2,000,000 per member
- Income Protection cover— matched up to $20,000 per month
If you’re holding more than that, you can still bring the extra across — it just gets standard underwriting for the bit above the limit. Everything within the limit moves over on matched terms.
Who can use takeover terms
To bring your cover across this way, a few things need to be true at the time you apply:
- You currently hold cover under a retail life insurance policy, an industry super fund, or an employer-sponsored super arrangement
- You’re currently working in your usual job — not on extended leave, workers’ comp, or off work for any reason
- You’re within the age range for our cover (15 to 64 at application, with cover running through to age 80 for life cover)
- You can provide a current policy schedule or recent paperwork showing what you’ve got and on what terms
That “currently at work” bit matters because we’re accepting your existing underwriting rather than reassessing your health. The insurer needs to know nothing major has happened between then and now. If your health has changed since your original cover was issued — even significantly — the takeover still works, because we’re matching the original underwriting, not your current health.
The process, step by step
- Step 1 — Quote and application — Get a quote through SMSF Insurance and complete an application, noting that you want takeover terms applied.
- Step 2 — Send through your existing cover details— A policy schedule, recent premium notice, or letter from your previous insurer confirming what you have
- Step 3 — Underwriting review— The insurer reviews your documents and confirms the takeover. This is usually faster than standard underwriting because there are no medicals involved.
- Step 4 — New policy issued— Your SMSF becomes the owner of the new cover. Premiums come from the fund.
- Step 5 — Cancel the old cover— Once your new cover is confirmed in force, you cancel the existing policy. Don’t do this before your new cover is active — that’s where gaps happen.
What carries across, and what doesn’t
Under takeover terms, your underwriting position comes with you — that’s the whole point. So pre-existing conditions that were accepted on the original cover stay accepted. Any exclusions or loadings you had carry across. And if you’ve already served a waiting period on income protection, you don’t restart it.
What doesn’t carry across are the product-specific things — policy definitions, available benefit periods, optional extras, and the actual premium rate. Those follow the new policy because, technically, it’s a new contract. The big thing — your underwriting — comes with you. Most of the smaller stuff is handled by the new policy’s product design.
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?
We make moving your life insurance into your SMSF as straightforward as it can be. Get a quote in minutes, and if you qualify for takeover terms, we’ll match your existing underwriting so you keep what you’ve got. |
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