Transferring a Life Insurance Policy

Typically, your life insurance requirements change throughout your life. If you find your circumstances are different and you’d like to transfer your life insurance policy to another person or company, you’ll generally be able to do so by completing a transfer of insurance form.

Published June 10, 2021

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Your Options When Transferring a Policy

If your personal circumstances have changed, you may be thinking of transferring your policy to a different person or entity. In these situations, you’ll generally have the following options available to you:

  1. You could change the policy owner on your life cover to another individual.
  2. Alternatively, you could transfer your policy to a different company.

Important Considerations Before Switching Life Insurance Companies

Reasons You Might Want to Transfer Your Existing Policy

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Can You Transfer a Life Insurance Policy to Another Person?

Yes, generally you can transfer a life insurance policy to another owner by filling in a Memorandum of Transfer.The policy owner has entire control over the life insurance policy; decide who the beneficiaries are, the payment arrangements and the amount of coverage. 

Therefore, you’ll need the policy owners’ consent for transferring the policy, and they’ll need to complete and sign the transfer document.

The process of transferring a life insurance policy is whereby the policy owner completes a memorandum of transfer to have the policy owner changed to a new person or entity. All existing policy owners must consent to the transfer and complete the memorandum of transfer form. This may be done for tax, premium funding or family planning reasons.

Is It Possible to Transfer a Life Insurance Policy to Another Company?

Yes, generally transferring your life insurance to another company is possible. However, you would first need to apply to your new life insurance company, wait to be underwritten and accepted and then cancel your existing policy and start the new policy with your selected insurer.

Why Would You Want to Transfer a Life Insurance Policy?

Typically, there are a few situations when you may think of switching to a different insurer. These reasons often include:

  • Changes in your personal circumstances: Typically, you should be reviewing your life cover periodically throughout your life to make sure you have the right cover for your requirements. For instance, you may want to switch the owner on your policy if you’ve recently gotten a divorce.
  • You no longer want to pay for your policy personally: Generally, you might consider transferring your policy to a different person or entity if you don’t want to pay your premiums privately but would like to transfer the policy to Super. However, you typically won’t be able to transfer the policy and will need to purchase a new policy.
  • Your existing policy doesn’t suit your requirements: Many people consider transferring the ownership of their life cover if they find that the features and benefits of their current policy no longer suit their requirements. However, it’s important to look at the Product Disclosure Statements on both policies before making any decisions.

What to consider before transferring ownership

  • There can be tax implications when transferring ownership of a life policy to someone who is not related to you.
  • You can transfer a policy to Super, but technically you cannot transfer a Personally Owned policy to a super environment. Insurers can get around this obstacle by cancelling your current policy and then reissue you a new policy. Generally, you won’t need to go through any further underwriting. However, it’s best to check with the relevant insurer before you make a decision.
  • You cannot transfer trauma or own occupation TPD cover into a super fund as these cover types are not permitted in a superannuation environment.

Life Insurance Policy Memorandum of Transfer

If you’ve decided that you’d like to go ahead and transfer the ownership of your life insurance policy, then you’ll typically need to request a memorandum of transfer from your insurer. You’ll then need to complete the form and return it to the company to complete the transfer.

MLC-Memorandum-of-transfer-11062021

Source: mlcinsurance.com.au (June 2021; This is an example of a memorandum of transfer from MLC; however you will need to request the specific one for the relevant policy you hold.)

Remember, nobody knows what will happen in the future. If you do decide to replace or transfer your life insurance policy contact us for a quote and receive all the information required to make an informed decision.

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