If a trustee of a superannuation fund was to accept a transfer of a life insurance policy from a member or relative, the fund would in fact breach the acquisition of asset rules, jeopardising the complying status of the superannuation fund.
However, where an individual has an existing life insurance policy outside of superannuation and wishes to transfer it to a superannuation fund, they can ask the life insurance provider to cancel the existing policy and reissue a new policy in the name of the trustees of the superannuation fund. The cancellation and reissue of the policy means the cover is effectively transferred to the superannuation fund without a breach in the acquisition of asset provisions.
However, careful consideration should be given to ensure the individual does not lose any benefits from the original policy when having the policy reissued in the name of the trustee.
In most cases, there is no additional risk for then life insurance provider and they would permit the cancellation and reissue without additional underwriting.
Some providers may nevertheless see this as an opportunity to refresh the policy's terms and conditions, which would cause detriment to the policyholder's detriment.
To get advice on how to transfer your exisitng life insurance policy into your super fund, contact Cornerstone Insurance now.