Transferring a Life Insurance Policy in Australia
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Can You Transfer a Life Insurance Policy?
Yes, but the answer depends on what you mean by “transfer.”
There are three common ways people refer to transferring a life insurance policy:
| Transfer Type | Is It Possible? | How It Works |
|---|---|---|
| Transfer ownership to another person or entity | Usually | Subject to insurer approval. The policy owner changes through a formal ownership transfer or assignment, once the insurer has approved the request. |
| Switch to another insurance company | Not directly | You’ll generally need to apply for a new policy and cancel your existing one once the new cover is active. |
| Transfer insurance into or between super | Sometimes | This depends on the insurer, the super fund’s eligibility rules, and the type of policy you hold. Take note that trauma insurance and own-occupation TPD cover cannot be held inside superannuation under current legislation (the SIS Act), regardless of insurer or fund. Life insurance and any-occupation TPD cover can generally be considered for super. |
Each option has different requirements, so it’s important to understand which type of transfer best suits your circumstances. It’s important to understand that not all cover types are eligible to be held inside super. Life insurance and any-occupation TPD cover can generally be considered for a super environment. Trauma insurance and own-occupation TPD cover cannot be held inside superannuation under the Superannuation Industry (Supervision) Act, this is a legislative restriction that applies regardless of which insurer or super fund is involved.
3 Ways to Transfer a Life Insurance Policy
Transferring Ownership of a Life Insurance Policy
If you want someone else to own your life insurance policy, you may be able to transfer ownership through a formal assignment. This changes the legal owner of the policy while the insured person may remain the same.
Ownership may commonly be transferred to:
- A spouse or partner
- A family trust
- A business
- A business partner
- Another eligible individual or legal entity
Once ownership has been transferred, the new owner generally becomes responsible for paying premiums, managing the policy, updating beneficiaries where applicable, and making decisions about the cover.
Ownership transfers are often used for estate planning, business succession planning or following significant life events such as marriage or divorce.
Switching to Another Life Insurance Company
If you’re looking for lower premiums or different policy features, you generally can’t transfer your existing policy directly to another insurer.
Instead, you’ll usually need to apply for a brand new policy.
The process typically involves:
- Comparing available policies.
- Completing a new application.
- Undergoing underwriting if required.
- Waiting for your new policy to be approved.
- Cancelling your existing policy once your replacement cover has started.
Avoid cancelling your current policy until your new cover is fully in place. Doing so could leave you uninsured if your application is delayed or declined.
Transferring Life Insurance Into or Between Super
Some people choose to hold life insurance through their superannuation fund instead of owning it personally.
Depending on your circumstances, you may be able to:
- Transfer insurance between eligible super funds.
- Replace an existing retail policy with new cover inside super.
- Consolidate insurance when changing super funds.
Note that trauma insurance and own-occupation TPD cover cannot be held inside superannuation under the SIS Act, regardless of fund. The eligibility considerations below apply to life insurance and any-occupation TPD cover. Eligibility requirements vary between super funds, and not every policy can be transferred. In some cases, you’ll need to apply for new cover rather than transferring your existing policy.
If you’re considering insurance through super, it’s important to understand how ownership, premiums, tax treatment and benefit payments may differ from policies held outside super.
Why Someone Might Transfer Their Life Insurance
People choose to transfer or replace their life insurance for many different reasons.
Common situations include:
- Getting married or divorced
- Starting or selling a business
- Establishing a family trust
- Updating estate planning arrangements
- Looking for lower premiums
- Wanting different policy features
- Consolidating insurance
- Changing super funds
- Experiencing major financial or family changes
Reviewing your cover after significant life events can help ensure your insurance continues to meet your needs.
What to Consider Before Transferring a Life Insurance Policy
Before making any changes, take time to compare your existing cover with any proposed replacement.
Some important considerations include:
Existing Policy Benefits
Older policies may include benefits or features that are no longer available on new policies. Make sure you understand what you may be giving up before switching.
Medical Underwriting
If you’re applying for a new policy, you’ll usually be assessed based on your current age, health, occupation and lifestyle. Changes to your health since taking out your existing policy could affect your eligibility or premiums.
Waiting and Contestability Periods
Replacing your policy may result in new waiting periods or contestability periods applying to your new cover.
Premiums
Lower premiums aren’t always the best value. Compare the level of cover, policy features and exclusions rather than focusing on price alone.
Tax Considerations
Depending on the type of transfer and who will own the policy, there may be tax implications, including potential capital gains tax (CGT) consequences. These can differ depending on the type of cover involved, for example, CGT treatment for TPD and trauma cover can differ from life cover, particularly where a company or trust is the policy owner. If you’re transferring ownership or changing how your insurance is held, seek professional tax advice to understand how the transfer may affect your specific situation.
How to Transfer a Life Insurance Policy
The exact process depends on the type of transfer you’re making, but it generally follows these steps.
- Decide whether you want to transfer ownership, switch insurers or move insurance into super.
- Review your existing cover and compare your options.
- Contact your insurer or super fund to understand the requirements.
- Complete any required application or ownership transfer forms.
- Wait for approval before making changes to your existing policy.
- Confirm your new arrangements are active before cancelling any current cover.
Taking a structured approach can help minimise the risk of losing valuable benefits or experiencing a gap in protection.
Can You Transfer a Life Insurance Policy to Another Person?
In many cases, yes. Life insurance ownership can often be transferred to another eligible person or legal entity through an ownership assignment. Common examples include transferring ownership to:
- Your spouse or partner
- A family trust
- A business
- Another eligible policy owner
The insurer will usually require ownership transfer documentation before the change can take effect.
Can You Transfer a Life Insurance Policy to Another Insurance Company?
Not directly. Unlike transferring ownership, switching insurers generally involves applying for a completely new policy rather than moving your existing one.
Before making the switch, compare:
- Premiums
- Policy features
- Exclusions
- Waiting periods
- Benefit limits
- Underwriting requirements
Only cancel your existing policy after your replacement cover has been accepted and is active.
Can You Transfer Life Insurance Into Super?
Depending on the policy and the super fund, transferring insurance into super may be possible, although it often involves replacing your existing cover rather than moving the policy itself. This applies to life insurance and any-occupation TPD cover, trauma insurance and own-occupation TPD cover cannot be held in a super environment under current legislation.
Some super funds allow eligible members to transfer insurance when changing funds, provided certain conditions are met.
If you’re considering insurance through super, it’s worth comparing:
- Ownership arrangements
- Premium payment methods
- Available cover
- Eligibility requirements
- How benefits are paid
Understanding these differences can help you decide whether holding insurance inside or outside super is more appropriate for your circumstances.
Frequently Asked Questions and Answers
Can a life insurance policy be transferred to another person?
Yes. In many cases, ownership can be transferred to another eligible person or legal entity by completing the insurer’s required ownership transfer process.Can I transfer my life insurance to another insurer?
Generally, no. You’ll usually need to apply for a new policy and cancel your existing policy once your new cover is active.Will I need another medical assessment?
Possibly. If you’re applying for a new policy with another insurer, you’ll generally be assessed based on your current health, age, occupation and lifestyle.Can I transfer life insurance into super?
Life insurance and any-occupation TPD cover can generally be transferred or replaced with new cover inside an eligible super fund, subject to that fund’s rules. Trauma insurance and own-occupation TPD cover cannot be held inside super under current legislation, so these types of cover would need to remain outside super. Eligibility requirements for the cover types that are permitted still vary between funds.Will transferring ownership affect my beneficiaries?
It can. The policy owner usually controls many aspects of the policy, including beneficiary nominations where applicable. Review your beneficiary arrangements whenever ownership changes.Are there tax implications when transferring a life insurance policy?
Depending on the type of transfer and your circumstances, there may be tax consequences. If you’re unsure how a transfer could affect you, consider seeking professional advice before proceeding.
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can I sell my life insurance plan as life settlement in australia and how to do it?
Hi Michaela,
That’s a great question. How old is your policy, some very old policies taken out pre 1990’s have a cash value. Depending on the type of policy and the insurer. Typically, if your policy was taken out after this type you would generally not have a cash value. Typically, you’ll only get money back from your existing insurer if you’ve paid any of your premiums in advance. As term life insurance does not have a cash component, it generally does not have a surrender value. Please contact your insurer dircectly.
If I change my Life Insurance policy to another company will I get the money I’ve paid to the existing company.
Hi Lauren,
That’s a great question, thanks. Typically, you’ll only get money back from your existing insurer if you’ve paid any of your premiums in advance. As term life insurance does not have a cash component, it typically does not have a surrender value. There are very few endowment type policies in the market, so if you took out your policy 20+ years ago your policy may have a surrender value. If this is the case, you may want to contact the insurer to find out if it has any value before you cancel or transfer your policy.
I have transfer of ownership form and identification of individual form as my father who held the policy for me has passed. Do I need any other forms?
If I transfer my life insurance policy to my son can he put me down as successor?
Hi Lorraine,
If you’re asking whether your son, as the new policy owner, can name you as his beneficiary to receive the benefit, then yes he can when he is made policy owner.
Hi, is there a minimum age that someone must be to be nominated a Term Life Policy owner?
Hi Gary,
Great question! Because the policy owner is also the person responsible for paying the premiums, a permanent Australian resident must generally be between 18 and 75 (depending on the insurer) to apply for term life insurance.
However, you usually have a few policy ownership options. It’s best to review these options before making a decision because the owner of your policy is also responsible for nominating beneficiaries, updating details, and can cancel the policy at any time.
I have a life insurance policy with Asteron, in my personal name. Can the policy owner be changed so that I can pay it from superannuation?
Hi Leigh,
Thanks for your question.
Generally, you can transfer your life insurance ownership to your Super, but to do this you’ll typically need to cancel your current policy and then have the company, in this case, Asteron, reissue a new policy. Usually, you won’t have to go through any further underwriting, however, please check with Asteron before you cancel any policies.
Deciding whether to have your life insurance inside or outside superannuation can be complex and you should carefully consider the pros and cons of both.
For example, when your super fund becomes the policy owner, any benefit paid is paid to the fund and a number of conditions will need to be met before you or your beneficiaries can access the benefit. On the other hand, generally, any life insurance premiums paid for by your fund are tax-deductible to your fund.
If you would like a consultant to provide you with more information, please fill in the quote form above or give us a call on 1300 135 205.
We look forward to helping you make an informed decision.
If your spouse created a last will and testament that states she is leaving everything she owns to her husband in the event of her death, can four term life insurance policies on two children of theirs and two relatives (four policies total – of which are the four insured individuals) be transferred to her surviving (her surviving husband) when she passes? The state where the term life insurance policies originated is Alabama.
Hi Don
Great question, however please note we are based in Australia so I am not sure how valuable may answer will be to you.
In your situation above in general the term life insurance policy would be an asset of the estate, therefore if the policy owner passed away the executor would have to distribute the assets “Policy ownership” according to the intentions in the will.
To understand how your scenario works in Alabama I would call the relevant insurer and ask to talk to their technical team and talk through your scenario with them as I am sure they would be able to assist.