Cheap Life Insurance

People often struggle to find cheap life insurance premiums for policies that provide good value. There is little information on how to find the policies that are reasonably priced or steps you can take to further reduce your premium costs.

Purchasing life cover for the first time is even more difficult, especially when you are searching for the most affordable option right from the start as you don’t know what effects your rates or how to structure your policy to get further premium reductions.

Therefore I have revealed my top 10 steps to finding the cheapest life insurance in Australia along with providing you with access to our exclusive Life Insurance Direct’s quote index. While the research doesn’t cover the entire market, you are able to compare 32 term life insurance policies premiums with the click of a button.

10 steps to finding the cheapest life insurance in Australia

I have listed my 10 personal steps prioritised based on the savings potential however the impact each step can have on any one person can be different therefore always best to consider all 10 of these steps when searching for more affordable rates.

number-1Apply for Cover as Young as Possible

Life Insurance Companies base their premiums on mobility & mortality rates (ie: your age effect your likeliness of illness or premature death), therefore generally the younger you are the cheaper your premiums will be, and the healthy you are therefore consider cover as soon as possible.

number-2Shop Around

There are 3 main distribution channels in Australia get multiple comparison quotes from each channel premiums can vary from 10-150% more expensive when comparing like for like:

  • Retail: Acquired through a financial adviser and comparison website
  • Group: Procured through your Superfund or employer
  • Direct: Obtained either through your bank, online or from a big brand

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number-3Consider Level Premiums

This premium type can provide far more affordable premiums in the long term. However, if you only need cover for the short term then stepped premiums might be a better option for you.

number-4Quit Smoking

If you are a smoker, your premium rates will be higher. When you quit smoking, your premium rates could be reduced by as much as 30 – 50%.

number-5Healthy Lifestyle Discounts

Recently introduced into the life insurance industry is the healthy lifestyle discounts and benefits on offer which can have a major effect in reducing your premiums by up to 20%

  1. AIA Vitality
  2. MLC On track
  3. Clearview Health Maintenance Rewards
  4. Asteron Healthy Life Discount Options
  5. Tal Health Sense

number-6Yearly Premiums

You can save you 5-8% on your premiums as most companies charge you more for paying your premiums on a monthly or fortnightly basis.

number-715% Tax Credit

A Tax credit of 15% is generally available to your super fund if you fund a Retail policy out of your existing super fund which ensures you are not missing out on the 15% tax back you would have received if you had funded it directly from a SMSF or a group policy of the super fund.

number-8Multi Policy Discounts

You can save on premiums when purchasing multiple policies from the same company. For example, if both you and your partner take out a policy from the same insurer you may receive a discount on your premiums of up to 10%.

number-9Combined or Linked Benefits

You’ll generally receive additional discounts when purchasing multiple types of cover on the same policy from the same company. These policies are cheaper than stand alone polices.

number-10Avoid Policy Fees

Consider insurers / polices that have removed policy fees from their premium calculation. For example, MLC Insurance and Clearview Life Solutions.

Who has the cheapest term life insurance?

In our research we tried to include data from all three distribution options available to customers when selecting life insurance:

  1. Direct insurance: Obtained either through your bank, online or from a big brand
  2. Retail insurance: Acquired through a financial adviser and comparison website
  3. Group Polices: Procured through your Superfund or employer

It is important to note that our research was conducted on rates for term life insurance only and that you shouldn’t make a decision purely based on premiums. Always consider the entire policy before deciding which one is best for you and your family. Carefully review each policy’s benefits, exclusions and terms and conditions in their product disclosure statement.

Upon reviewing the data, we discovered the 10 cheapest life insurance quotes for 35-year-old males and females to be retail and group policies.

Cheapest Life Insurance

Ranking Policy Premium
1 Sunsuper for Life $12.50
2 HostPlus Personal Super Plan $17.30
3 Colonial First State First Choice Insurance $17.92
4 MLC Insurance $20.12
5 First State Personal Death Cover $21.67
6 Rest Select Death Cover $21.67
7 Tal Accelerated Protection $24.12
8 BT Protection Plans $25.33
9 Clearview Life Solutions $25.35
10 Zurich Wealth Protection $25.57

The above monthly premium rates were calculated on a 35 years old, non-smoking female, based in NSW, looking for $500,000 worth of term life insurance. Source: Life Insurance Direct Quote Index.

10 Cheapest Life Insurance Rates for a Male 2016

Ranking Policy Premium
1 First State Personal Death Cover $21.67
2 Sunsuper for Life $23.00
3 Colonial First State First Choice Insurance $23.75
4 MLC Insurance $25.58
5 HostPlus Personal Super Plan $28.30
6 AIA Priority Protection $30.06
7 Asteron Life Complete $30.17
8 Tal Accelerated Protection $30.48
9 Zurich Wealth Protection $30.91
10 Onepath OneCare $32.00

The above monthly premiums were calculated on a 35-year-old non-smoking male, based in NSW, looking for $500,000 worth of term life insurance. Source: Life Insurance Direct Quote Index.

How your sum insured affects your life insurance rates

Here’s a tip few people know about: The first $100,000 of life cover is the most expensive to purchase. Generally the greater your sum insured, the less you’ll pay per $1,000 worth of cover

For example, a 35 year old, non-smoking, female, purchasing a $1,500,000 policy will only pay $0.037 extra per month for every $1000 cover added. In comparison, if that same female purchased a smaller policy of only $300,000 it would be $0.072 per month more for every $1000 of cover added. That’s a significant difference of $0.035.

Sum Insured 35 40 45 50 55 60
$300,000 $0.072 $0.079 $0.103 $0.166 $0.283 $0.511
$500,000 $0.050 $0.059 $0.084 $0.140 $0.242 $0.441
$1,000,000 $0.039 $0.047 $0.069 $0.119 $0.210 $0.389
1,500,000 $0.037 $0.045 $0.067 $0.117 $0.208 $0.387

Data sourced from Average Retail Premiums from the 2016 Life Insurance Quote Index.
We have made it easy for you to access our research to help you find the cheapest term life insurance policies based on your particulars.

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Remember do not base your decision solely on the cost of premiums. While you are searching for the most affordable policy, your beneficiaries should remain your priority. Ensure you do not compromise on the policy terms and conditions just because the premiums are cheaper. Be sure to read the Product Disclosure Statement and ensure it meets your needs before selecting a policy.

If you need further assistance, or if you have found cheaper premiums somewhere else in Australia please let us know below, and we will look to see if we can include them in next years research.

Published: July 25, 2017
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