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There are four main types of life insurance cover available in Australia. You can take out these cover options individually or opt for a bundled policy.
Learn moreLife insurance policies come with a range of benefits. By picking and choosing your benefits, you can tailor your cover to suit your circumstances. However, you should understand these before signing up.
Learn moreYou may still be able to get covered even with a pre-existing medical condition, although you may need to meet some criteria to be eligible. Learn how the life insurance underwriting process works before applying for cover so you’re aware of any additional loadings or exclusions.
Learn moreFinding out what affects the cost of life insurance premiums can help you save money on your life insurance policy by adjusting your benefits to match your needs.
Learn moreThe premiums you pay on a life insurance policy will depend on many factors, including if you choose a stepped or level premium policy.
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Life insurance can be an awkward or uncomfortable consideration. We all like to think that we’re a bit invincible and that the worst won’t happen to us. But just like the insurance you buy for your home and car, life insurance can provide a financial safety net for you and your loved ones, should the unthinkable happen. And while some people do have some level of life insurance tied into their superannuation, opting for a one-size-fits-all solution could leave you underinsured.
It’s important to make sure you have the right level of cover to meet your needs – whether that’s helping to pay off any debts or to make sure your family is provided for. And that’s where Compare the Market comes in. In a matter of minutes, compare a number of policies side-by-side to see what options are available to you. But before you dive in, our experts have these tips to support your decision-making: Number one – always read the PDS – that’s the Product Disclosure Statement – from cover to cover.
The PDS will tell you everything you need to know about that life insurance policy to figure out whether it’s right for you or not. Two – Be honest about your medical history. If you don’t disclose an existing medical issue or condition upfront when taking out your policy, you might get a nasty shock down the track when you find out you’re not covered for it. Finally, pay attention to the inclusions.
Every policy features a different set of included and excluded possibilities. You’ll want to pick one that provides cover for any problems you might face later in life. So, whether you’re taking out a new policy or you’ve decided it’s time to consider a new provider, it pays to compare. Start your journey today with Compare the Market.
It’s important to carefully read the Product Disclosure Statement (PDS) of any life insurance policies you’re thinking of purchasing. The PDS will contain all the relevant information about the policy so you can decide whether it’s the best option for you.
If you have any pre-existing medical conditions, always be honest with life insurance providers when comparing options. Some pre-existing conditions may not be covered or may affect your premium, but you don’t want a claim to be rejected because you weren’t honest about your medical history.
Pay very careful attention to the inclusions and exclusions of the policies you’re comparing. Some events or illnesses may not be covered by a policy, or the inclusions may not be relevant to you.
Life insurance is designed to provide you or your family with financial security if you were to:
There are four types of life insurance you’ll typically come across:
While these are all considered types of life insurance, they’re all quite different. You should take the time to read about all the types of life insurance before you decide on the right option for you.
When you take out life insurance, you sign a contract with an insurer and agree to pay the policy premiums regularly. In exchange, your insurer pays a lump sum to your listed beneficiaries (e.g. spouse, children) if you pass away, or to you if you were to become seriously ill, injured or permanently disabled.
Life insurance either covers you for an agreed-upon term (e.g. for the next 10 or 20 years) or, for some insurers, until you reach a certain age. Also, you may need to sit through waiting periods before you can claim on your life insurance. To see your policy’s waiting periods as well as any inclusions, exclusions and limits, refer to the relevant PDS.
It’s also worth noting that many superannuation funds include some form of life insurance. To check if you already have life insurance through your superannuation, call up your super fund. You might find that the cover you have through your super may or may not be sufficient for your needs.
You can’t claim any tax deductions for most life insurance premiums. However, income protection insurance premiums may be tax-deductible, as these protect against loss of income, not life.1 You should consider talking to a tax specialist to determine what you can claim on tax each financial year.
Please note: This is provided for information purposes only and does not constitute tax advice.
You’ll need to make this decision for yourself based on how you think your family would cope if you weren’t there to support them financially.
Specifically, you may need to consider how your family could fare if they needed to pay off debts (e.g. credit cards or car loans) or cope with regular living expenses (e.g. school fees and clothes) without your income.
Life insurance also allows you to leave an inheritance to help your children get ahead if you’re no longer around.
There are four types of life insurance you’ll commonly see offered by Australian life insurers:
Term life insurance could help financially support your beneficiaries (e.g. your family) with a lump sum payment if you were to pass away or receive a terminal illness diagnosis. This policy is a common type of life insurance offered by Australian insurers.
Term life insurance replaced whole of life insurance as the most popular form of life insurance for Australians in 1992 when compulsory superannuation was introduced. Unlike whole of life insurance, term life insurance only covers you for a predetermined period of your life (e.g. until you turn 80).
If an incident leaves you totally and permanently disabled and unable to work again, or unlikely to be able to return to work, Total and Permanent Disability (TPD) insurance pays a lump sum of money. Depending on the TPD cover you take out, it may provide a payout if you can’t work in your own occupation or any occupation based on your education, training and experience.
Trauma insurance policies (also known as critical illness insurance) are designed to support you if you’re diagnosed with a serious medical condition. This type of policy could provide a lump sum of money to help you pay for medical bills and support you during your recovery time away from work.
Unlike the other types of life insurance that pay one lump sum benefit, income protection can replace a percentage of your lost income (salary and superannuation) with monthly payments while you recover from a serious illness or injury and cannot work (after you’ve served a waiting period during which cover is not provided).
When you take out a life insurance policy, your risk factors will be considered during the underwriting process. This could affect your total premium or result in an exclusion or a loading on your policy. Learn more about life insurance exclusions, loadings and indexation.
However, life insurance for high-risk individuals will usually cost more and there’s always a chance you may be declined.
To determine if you’re a high-risk individual and how much you’ll pay for such a policy, insurers will typically assess your occupation, health, lifestyle and hobbies.
Some examples that may categorise you as a high-risk individual include:
Keep in mind that if you become seriously injured or ill and then take out a life insurance policy, you won’t be able to claim this injury or illness on your cover.
Generally speaking, term life insurance or death cover for women may cost less than men because they typically have a longer life expectancy, lower mortality rates and, on average, better health. However, this is not always the case. Insurers will consider a number of factors like age, gender, health, smoking status, occupation, lifestyle and other risk factors when calculating life insurance premiums for women. Women should compare different quotes and options before choosing a policy that suits their needs and budget.
If you’re curious about what you’ll pay for life insurance, one of the easiest ways to find out is to get a life insurance quote using our comparison service.
While there’s no type of insurance called family life insurance, some insurers offer joint or multi-life policies that can cover you, your partner and even your children. This policy pays a lump sum of money to your beneficiaries should any of the insured family members become terminally ill or pass away.
Australian insurers may offer life insurance to seniors between the ages of 60 and 75, while others may have a higher maximum cover age. Eligibility and premiums will depend on your current health status and medical history.
How much life insurance costs in Australia will vary between each person. The amount you may pay for life insurance is based on factors like your age, gender, health, smoking status, occupation, lifestyle and other risk factors.
Your life insurance premiums will also depend on the type of policy, what the policy covers, how much cover you choose to take out and whether you choose stepped or level premiums.
To determine how much life insurance may cost you, you can compare life insurance quotes using our online comparison service. Or, if you’re not sure how much cover you need, use our life insurance calculator.
Stepped premiums
Stepped premium rates are calculated based on your age at your policy anniversary. This means your stepped premium will generally increase each year as you get older.
Level premiums
Level premium rates, unlike stepped premiums, are calculated based on your age at the start of your policy. Level premiums aren’t fixed and can change. Most level premiums policies will automatically change to stepped premiums on your policy anniversary around age 65 or 70, depending on the policy you choose. You should always read your policy’s PDS for further detail.
Neither level nor stepped premiums are guaranteed to remain the same. Stepped and level premiums, and the amount you will pay, will likely increase over time when:
For both stepped and level premiums, inflation protection can increase your cover amount each year to keep pace with the cost of living and your premium will increase in line with the new cover amount. You can remove inflation protection from your policy at any time.
Life insurance policies can come with a variety of benefits and will be priced accordingly. This means that you’ll want to understand everything that’s included in your policy so you’re not paying for cover you don’t need or missing out on cover you do.
Some common benefits include:
Sources: 1 Australian Taxation Office, Income protection insurance. (Accessed April 2022)
As the Executive General Manager of Health, Life and Energy at Compare the Market, Steven Spicer understands just how unpredictable life can be, which is why he believes so strongly in the benefits of being covered. Steven is passionate about making life insurance more accessible and educating Australians on how to find the right product for them.
Steven has 20 years of experience as a people-first business leader, with a focus on creating services that put customers first.