Joint Policy Factsheet

Important information about joint ownership, cross-ownership, business & SMSF ownership of cover

What types of ownership are there?

Joint ownership
 
Joint ownership generally involves a couple owning a single policy which covers both, or one of their lives, and allows the policyholders to claim benefits jointly but not separately.
 
This can be a convenient way to insure your family as a cohesive unit and might be beneficial in terms of premium discounts, ease of claiming and reducing policy and other fees.
 
Cross ownership

Cross ownership is where one person or entity insures another person’s life and can protect your family in the event that someone you rely on financially dies or becomes unable to work and meet financial commitments - such as child support, mortgage repayments or other debts and liabilities.
 
Company, Trust and Self-Managed Superannuation Fund ownership
 
A company, trust or SMSF can also own cover over a person or a number of persons’ lives.
 
Things to consider
 
The policy ownership structures above can come with a number of benefits.
 
However, there are important factors to consider when applying for, or agreeing to, cover over your life under these ownership structures as opposed to covering your own life separately under a policy you own and choosing your beneficiaries.

Who will receive policy notices?

AIA is required by law and relevant industry codes to send certain notices to policy holders. These include transaction confirmations to be sent when the following occur:
 
  • varying terms;

  • cancelling a product;

  • acquiring a product; and/or

  • paying a benefit

  • a change about the policy which would have to be disclosed in the Product Disclosure Statement

  • re-rating; and

  • increase in fees or charges 
These notices may contain sensitive personal information about the customer.
 
The Australian Securities and Investments Commission (ASIC) has acted to provide limited relief from the requirement to provide a transaction confirmation under s1017F to the policy owner (ASIC (Cash Settlement Fact Sheet and Confirming Transactions) Instrument 2022/809). Insurers can rely on this relief where they reasonably believe the provision of the confirmation would pose an “unacceptable risk” of a person experiencing family violence, provided certain other conditions are met.
 
Please get in touch with us using the contact details below if you are impacted by family or domestic violence and you are concerned about a transaction notice being sent to a policy holder.

CALI Best Practice Guidance - Family and Domestic Violence Policies

The Council of Australian Life Insurers has developed ‘Best Practice Guidance - Family and Domestic Violence Policies’.
 
AIA will comply with this guidance where safe and appropriate and recognises that family and domestic violence (FDV), financial abuse and coercive control issues can arise where life insurance policies are held jointly, or a person affected by FDV is an insured life under a policy where the perpetrator is a policy owner.
 
Consistent with that guidance, for new Retail  products we will:
 
  1. Where possible and appropriate, seek consent from people who will be included as insured lives under a life insurance policy (this relates to non-group policies and adult insured lives only).

  2. Where a customer with a joint or cross owned policy has been recognised as affected by family and domestic violence:

    • Help them understand the steps required to legally alter or separate the policy;

    • Not require them to contact or directly obtain consent from the perpetrator;

    • Help them identify any other policies that may require changed arrangements; and

    • Consider whether we can offer a new separately held policy without requiring a new underwriting assessment.
       
  3. Where possible and safe, we will notify each insured life of the cancellation of a policy.
Please let us know if it may give rise to a safety risk if we contact a life insured to notify them a cross-held policy over their life is being cancelled.
What if we separate or divorce, I want to cancel the cover, or remove myself or another person as a policy owner or life insured, or change the owner?
 
AIA is bound by the terms of the policy, so it is important to consider whether issues may arise with joint cover if you were to separate, divorce or experience FDV.
 
You and/or your partner might:
 
  • no longer wish to pay for cover insuring both of you;

  • no longer wish for an ex-partner to hold cover over your/their life;

  • not be able to afford the premiums covering both of you, and have to consider new cover on terms that might be less beneficial;

  • not want to rely on another party to pay premiums to retain your cover; and/or

  • not want notices sent to your former partner with your personal information, such as your address or workplace.
Under current law, AIA may only cancel a policy, change the ownership of a policy or change the beneficiaries and lives insured under a policy where (relevantly):
 
  • the policy terms expressly allow for this;

  • all policyholder’s consent and agree, such as by signing a request to cancel, or agreeing to a transfer or assignment of ownership by signing a memorandum of transfer. This will generally require the following people to sign depending on the policy ownership structure:

    • The individual policyholder if the policy is cross owned over another person’s life.

    • Both individuals if there are two policyholders with cover over one or both their lives.

    • If the policyowner is a company, the director(s) of the company or other authorised person(s).

    • The trustee of a trust or SMSF.

    Laws may also restrict how the ownership of a policy can be altered. For example, ownership of policies held by an SMSF cannot be transferred to an individual in certain circumstances and vice versa and may have to be cancelled and replaced with new cover. Your adviser can provide more information on what options are available.

  • there is a Court order under ss79 or 90SM of the Family Law Act 1975 (Cth) for the other policy holder to assign ownership of the policy; or

  • in exceptional cases, there is misuse of a product that is so severe that it constitutes a breach of the duty of utmost good faith.
What if I want a new policy just covering myself?
 
In cases of FDV, AIA will consider a request or application for new cover, which is for the sole purpose of a victim survivor replacing AIA cover which is jointly or cross-held by an abuser, without a further underwriting assessment. AIA will generally be open to such a request or application as long as the new cover is the same type of cover as, and does not exceed, the original cover.
 
This may/generally require a cancellation of cover already held over your life; which could require policyholder consent as above.
 
Any exclusions, loadings or limitations applying to the original cover will remain in place, though you may request an updated underwriting assessment to consider whether they can be removed.
 
In some cases, AIA, AIA Financial Wellbeing and/or your adviser will still be required to consider factors such as your income and liabilities in determining whether cover levels or certain product features are suitable for you.
 
However, any claimable events, medical conditions and/or reduction in income occurring since the date you originally had cover with AIA, will be disregarded for the purposes of underwriting the replacement policy provided there has been no period where you were not covered with AIA. If there have been periods where you were not covered, AIA will take into account only information as at the date your most recent continuous period of cover started.
 
In some cases, legacy systems or the law may prevent AIA from offering certain benefits or levels of cover. For example, agreed value income protection cover can no longer be offered.
 
However, AIA will minimise any detriment to you and offer the best terms practicable in the circumstances.
What if the other policy owner is threatening me, or I am worried about how they will react if I ask to change our cover?
 
If you or anyone else is in immediate danger, please call 000.
 
AIA will not require you to directly obtain consent or make direct contact with an abuser and may suggest alternatives such as contact via advisers, personal representatives or lawyers; or do this on your behalf where appropriate and permissible.
 
AIA does not tolerate abuse in relation to its products or services. If a person misuses our products or services to perpetrate abuse, where appropriate and to the extent permissible by law, we may be able to:
 
  1. first, send a warning notice to cease the misuse unless the misuse is so severe as to merit termination where permitted, or a report to authorities;

  2. terminate cover if allowed under our terms and conditions or at law, and the misuse is significant or repeated; and/or

  3. report significant misuse to law enforcement.
In exceptional circumstances, a life insurer might be able to cancel cover if the threats also constitute a breach of the duty of good faith, such as an indication that a claimable event will be deliberately caused so that a benefit can be claimed. Given the gravity of such cases, AIA would need clear evidence to establish that this has occurred.
Please get in touch with us using the contact details below if you are impacted by family and domestic violence.
1 This is not possible for Group insurance where we do not know the identity of fund members. For AIA’s current Direct products, the life insured must be the policy holder so separate notification or consent is not required.