Life Insurance in Australia

Life insurance is an important way to provide financial security for loved ones and can help ease the financial burden during a difficult time. Life cover has become increasingly important due to the rising cost of living and an ageing population. Overall, life insurance is an important tool for protecting loved ones in the event of an unexpected death, and it can provide peace of mind knowing that your family will be taken care of if something happens to you.

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Benefits of Life Insurance

  • Pays a lump sum benefit to your beneficiaries when you pass away or get diagnosed with a terminal illness.
  • Premiums from as little as $25.34 a month**.
  • Worldwide cover,  24/7
  • You can apply if you are aged between 10 and 74 years old
  • Available for purchase through your superannuation.

Definition of life insurance

Life insurance provides financial protection to the policyholders’ beneficiaries in the event of their death. The policyholder pays regular premiums to the insurance company. In exchange, the insurance company agrees to pay a lump sum to the beneficiaries named in the policy in case of the life insured’s death.

The beneficiaries can use this lump sum to cover funeral costs, outstanding debts, and ongoing living expenses. In addition, some life insurance policies may also provide benefits if the insured suffers from a terminal illness or becomes permanently disabled.

Types of Cover in Australia

  • Term life cover: This policy covers a specified period or “term”. The policyholder pays regular premiums to the insurance company. In the event of the policyholder’s death during the policy term, the insurance company pays out a predetermined amount of money (called the death benefit) to the policyholder’s beneficiaries.
  • TPD cover: TPD cover, or Total and Permanent Disability cover, is a type of insurance policy that provides cover if the policyholder becomes totally and permanently disabled and can no longer work.
  • Trauma Insurance: Critical illness cover is a type of insurance policy that provides cover if the policyholder is diagnosed with a serious illness or injury. If the policyholder suffers a covered condition, such as cancer, heart attack, or stroke, trauma insurance typically provides a lump sum payment that can be used to cover expenses.
  • Income protection: This type of insurance pays out a benefit to supplement your income if you cannot work due to a covered condition.

Benefits of Life Cover

Provides financial support to loved onesPremiums can be expensive
Can help pay off debts or mortgagesIt may not be necessary for everyone
Offers peace of mind and securityPolicies have limitations or exclusions
May offer tax benefitsSome policies may require a medical examination
Can provide funds for funeral expensesPolicies can be complex and difficult to understand
It can be used to leave a legacy or donate to charitySome policies have limitations on coverage amounts

How to Choose the Right Life Insurance Policy in Australia

Choosing the right life insurance policy in Australia can be daunting, but it’s essential to ensure that you have adequate protection for yourself and your loved ones. To find a policy that meets your requirements for  you and your family, please fill in the quote form above or call us at  1300 135 205, and a specialist will be able to help you.

Life Insurance Premiums

Life insurance premiums refer to the payments made by the policyholder to the insurance provider to keep their policy in force. Typically, you’ll be able to choose a policy with either stepped or level premiums, and the frequency of premiums can vary based on the insurer and the policyholder’s preferences. Common options include weekly, fortnightly, monthly or annual payments. Some insurers may offer incentives for paying premiums annually.

Factors affecting life insurance premiums

Sum insuredTypically, choosing a policy with a higher sum insured will result in higher life insurance premiums.For $ 1 million coverage a 27 year old non-smoking counsellor could pay $27.18 while she would pay $25.11 for $800,000 of life cover.
AgeHigher age typically means higher premiums as the risk of death increases.A 50-year-old non-smoking male who works as a qualified accountant can expect to pay around $75.21 for $ 1 million coverage as opposed to $29.39 as a 30-year-old male non-smoking qualified accountant.
LifestyleCertain lifestyle choices can increase the risk of death or illness, increasing premiums. For example, smokers, heavy drinkers, and those with high BMI may pay more.For a $500,000 $ 1 million life cover, a 35-year-old male Accounts clerk who doesn’t smoke can typically expect to pay around $28.33$16.86, while a 35-year-old Accounts clerk who smokes would pay $67.93.
Family HistoryA family history of certain health conditions, such as heart disease or cancer, can also impact premiums, increasing the risk of the insured developing the same condition.A person with a family history of cancer may pay more for coverage than someone without that history.
Premium frequencyThe frequency at which premiums are paid can impact the overall cost of coverage. Paying annually may be less expensive than paying monthly.A 28-year-old registered nurse applies for $500,000 of Life cover and pays $26.30  monthly, which equals $148.44 annually. If she chose annual premiums, she’d pay $237.05  for the year.
HobbiesEngaging in risky hobbies or activities can also increase premiums as insurers consider the increased risk of injury or death.A skydiver or scuba diver may pay more for coverage than someone who doesn’t engage in these activities.

Source: Life Insurance Direct Comparison Engine (March 2023; Premium estimates for examples in NSW)

Note: These are just examples, and the impact of each factor on premiums can vary depending on the insurer, policy type, and other individual factors.

How your life stage affects your cover requirements

Your life stage can significantly affect the level of coverage you may require. As your family, lifestyle and financial circumstances change, reviewing your insurance needs is important. Generally speaking, when you are younger and single, you may need less coverage than when you enter parenthood or later in life when assets such as property accumulate.

For example, if you are a young adult and don’t have any dependent children or substantial assets to protect, you may want a low level of cover . However, if you have a mortgage or other debt not covered by another insurance policy, more comprehensive or levels of cover may be necessary.

Life StageImpact on Life Insurance Requirements
SingleA single person with no dependents and no significant debt may only need enough coverage to pay for end-of-life expenses, such as funeral costs
MarriedA married couple with a mortgage and children may need coverage to ensure the surviving spouse can maintain their current lifestyle and pay for their children’s education.
Starting a familyA family with young children may need enough coverage to pay off a mortgage, cover future living expenses, and provide for the children’s education if the primary breadwinner passes away.
Growing FamilyAs a family’s financial obligations grow with the addition of more children and a potential home purchase, the amount of life insurance needed to cover these expenses will also increase.
RetirementIn retirement, a person may only need enough coverage to pay for end-of-life expenses if all financial obligations have been met and dependents are financially independent.

Compare life insurance costs

InsurerMale; SteppedFemale; SteppedMale; LevelFemale; Level

Source: Life Insurance Direct Comparison Engine (March 2023, Premium estimates for $ 1 million of life cover for a 35-year-old non-smoking individual who lives in NSW)

How to compare policies

When comparing life insurance policies, it’s important to consider several factors to ensure you choose the right one that suits your needs and budget. These factors include coverage amount, type of policy, premiums, underwriting process, and insurer’s reputation.

  1. Premiums: Policy premiums are generally made up by adding the base premium, policy fees and any applicable stamp duties. These are typically not applied to life cover but may be added to other policy types like Income Protection. To find the cheapest life cover, look for discounts for annual payments, savings when purchasing other types of cover from the same company and healthy life discounts. Alternatively, you could save on your premiums by maintaining a healthy lifestyle.
  2. Premium Types: Typically, there are three types of term life premiums:
    • Stepped premiums: Start cheap but cost increases as you age each year.
    • Level premiums: These may be more expensive when you apply for cover but do not increase due to a change in age and are worth considering for long-term affordability.
    • Hybrid premiums: Combines stepped and level premiums. Your premiums start as stepped but are converted to level style policy once the stepped premiums reach a higher amount than the level premium amount.
  3. Built-in Benefits: It’s important to examine the benefits you receive from your life cover. Some benefits are standard. However, these benefits may only be found in some policies. Or, some benefits may come standard with one provider but could be a paid-for option with another insurer. Common built-in benefits include:
    • Terminal illness benefit: If you are diagnosed with a terminal illness and have less than 12 -24 months to live, depending on the insurer, they will pay the full death benefit to you in advance.
    • Funeral advancement benefit: Typically range from $10,000 to 10% of your sum insured to help cover funeral expenses once the insurer receives the full claim forms and a valid death certificate.
    • Future insurability benefit: Allows you to add to your cover after a significant life event without providing additional medical information.
    • Financial advice benefit: Depending on your insurer, you could be reimbursed for the cost of obtaining financial advice. Depending on your insurer, this benefit generally ranges between $2,000 and $5,000.
    • Premium freeze option: If you’re on a stepped premium structure, you can freeze your premiums. However, your level of coverage will typically be reduced to keep your policy at its current price.
    • Indexation: To help your policy keep up with inflation, your level of cover increases either by the CPI or a set percentage (3-5%, depending on the insurer) each year, whichever is greater.
    • Interim cover: If you pass away due to an accident during your policy assessment, your insurer may provide a lump sum payment. Insurers generally pay out the lesser of $1,000,000 or your sum insured at the time of application.
  4. Exclusions: A standard exclusion refers to events, conditions, or circumstances your insurer won’t cover. For instance, most insurers won’t pay out your policy if your death resulted from suicide in the first 13 months after your policy was accepted. However, read your policy disclosure statement (PDS) to find out what you won’t be able to claim.
  5. Expiry Ages: Different policies have different expiry ages. Typically, you’ll find that most term life policies expire when you turn 100 years old. However, it’s best to check with your insurer.

Other policy terms and conditions: It’s important to read your policy’s product disclosure statement. For instance, if you try to avoid exclusion by failing to inform the insurer of your medical conditions, the insurer might be within their rights to decline a future claim or void your policy.

We make it easy for you to compare policies online with our powerful comparison engine.

Buy with confidence today for peace of mind tomorrow.

Personally owned vs. Super owned.

You generally can purchase a policy with you as the policy owner and payer of the premium. Alternatively, you can take out a policy through your superannuation, where the fund is the owner and payer of the premiums, with you being the life insured. 

Structuring your policy through super can  have several disadvantages  from cover purchased outside of Super. These include limited features and more stricter access to benefits as you need to meet SIS conditions of release and  policy terms and conditions before any benefits are paid.

Frequently asked questions and answers

  • How much life insurance coverage do I need?

    The amount of life insurance coverage you need depends on several factors, including your current and future financial obligations, age, health status, and income. It’s important to assess your situation and considering your options prior to making a decision. Fill in the quote form above or give us a call at 1300 135 205, and a specialist will be able to assist.
  • Can I change my life insurance policy after buying it?

    Yes, in Australia, you can change your life insurance policy after buying it, subject to the terms and conditions of the policy and the insurer’s approval. You can typically make changes such as increasing or decreasing the coverage amount, adding or removing riders, or changing the premium payment frequency. However, any changes to the policy may affect your premium amount or require you to undergo a new underwriting process.
  • What happens if I miss paying my premiums?

    Generally, the consequences depend on the policy and the insurer’s terms and conditions. You will most likely have a grace period to pay the premium before the policy lapses. If you pay the premium within this period, the policy will remain in force, and your coverage will continue as before. However, if you fail to pay the premium within the grace period, the policy may lapse, and you will lose coverage. You may also incur penalties, and if you want to reinstate the policy, you may need to undergo a new underwriting process or pay a higher premium.
  • How long does it take to process a life insurance claim?

    The time it takes to process a life insurance claim can vary depending on several factors, such as the insurer’s procedures, the complexity of the claim, and the completeness of the documentation submitted. The standard time for processing a life insurance claim is usually between 30 and 60 days from the date the claim is submitted, provided all the necessary documentation is in order. However, some claims may take longer, especially if the insurer needs additional information or verification.
  • What is a rider in a life insurance policy?

    In a life insurance policy, a rider is an optional add-on or amendment to the basic policy that provides additional coverage or benefits beyond the standard terms and conditions. Riders (linked benefit) can be added to a policy at the time of purchase or later, subject to the insurer’s approval. Common types of riders in a life insurance policy include total and permanent disablement cover, and or critical illness cover.

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