Compare Life Insurance

Life insurance is designed to provide you or your family with financial security if you were to:

• Pass away or be diagnosed with a terminal illness
• Become unable to work due to a sickness or an accident
• Become permanently disabled.

There are four types of life insurance you’ll typically come across:

• Term life insurance or death cover
• Trauma insurance
• Total and permanent disability insurance
• Income protection insurance.

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.

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).

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 variable age-stepped or variable 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.

Variable age-stepped premiums

Variable age-stepped (previously known as stepped) premium rates are calculated based on your age at each policy anniversary. This means your premium will generally increase each year as you get older and the chance of you making a claim increases.

Variable premiums

Variable (previously known as level) premium rates are calculated based on your age at the start of your policy, rather than your age at each policy anniversary. Variable premiums typically start off higher than variable age-stepped premiums, but aren’t fixed and can still change at the policy anniversary. Most variable premiums policies will automatically change to a variable age-stepped structure on your policy anniversary around age 65 or 70, depending on the policy you choose. You should always read your policy’s Product Disclosure Statement (PDS) for further detail.

Neither variable age-stepped or variable premium structures are fixed, and so they can increase over time if the benefit amount increases, discounts change or no longer apply, the insurer updates their premium rates or in response in government charges. Should your benefit amount increase, the cost of cover will be priced based on your age at the date of increase; you may find that this will generally result in a higher premium rate than your original cover.

To learn more about the different premium structures, refer to the Council of Australian Life Insurers (CALI) Life insurance premium fact sheet. The options available also vary between insurers, so it’s important to also read the PDS for details on each insurer’s offering.