What is Life Insurance?
Life insurance, also known as death cover, is a way of providing financial protection to your loved ones in case you pass away. If you die during the coverage period, a lump sum benefit gets paid to your nominated beneficiaries. This money can be used to pay off any outstanding debts, your mortgage, funeral costs, or to leave a legacy for your family members.
Life insurance in Australia is as a contract between you (the policyholder) and the life insurance provider (the insurer). Life insurance premiums are paid either annually or monthly in exchange for protection. If you stop paying your premiums, you are no longer protected.
Depending on your circumstances, you may or may not need life insurance.
Life insurance will be useful to you if you need help:
- Supporting your family’s current lifestyle should you die suddenly.
- Paying for burial expenses and funeral service.
- Replacing lost income due to sickness or injury.
- Provide for your child’s care and education.
- Paying outstanding debts, loans and mortgage payments.
- Creating an inheritance.
Generally, your need for cover will change as your family grows, your kids become financially independent, and as other assets, like superannuation, become more sizeable. Sooner or later you will need insurance of some sort.
From Quote to Application We Guide You Through The Process
The different types of life insurance in Australia
The kind of life insurance available in Australia is Term Life Insurance, which is offered for a set period, usually until you reach age 100, depending on the insurer.
Many insurers place different types of coverage under the life insurance umbrella, including:
- Total and Permanent Disability (TPD) insurance: Pays a lump sum benefit if you become totally and permanently disabled.
- Trauma Insurance: Provides a lump sum payment should you suffer from a critical illness as specified by your insurer.
- Income Protection Insurance: You receive a monthly benefit if you are unable to work for a specific period due to illness or injury.
You should choose a suitable policy based on your unique requirements and what you can afford.
Life Insurance Comparisons You Can Do Here
As a rule of thumb, you should consider a minimum amount equal to ten times your annual salary. However, this amount should be determined by your specific needs and unique circumstances.
Thinking about your situation thoroughly before you decide to compare policies will give you a good idea of how much cover you may need.
You should also understand the difference between purchasing direct vs retail, as this will have a significant impact on your premiums.
Direct Life Insurance
- Generally available without the need for medical examinations and can be purchased via telephone or online from the insurers themselves. These policies are usually more expensive and limit the maximum amount of cover you can get.
Retail Life Insurance
- Fully underwritten and purchased through a broker or comparison website. Advised policies typically ask many questions during application and as a result will usually offer cheaper premiums, while also allowing you to choose your cover amount.
How to compare life insurance quotes
The three main reasons people usually want to compare life insurance is to:
- Find more affordable cover,
- Obtain more comprehensive protection, or
- Purchase life insurance for the first time.
Get a life insurance quote without having to provide personal information
Select your level of cover, age, gender and state. We'll provide you with the most affordable quotes from Australia's top life insurance companies.
Compare life insurance quotes online in less than 60 seconds. A side-by-side comparison to help you find the right policy for your unique requirements.
When you feel confident in choosing a life insurance policy book an application and a specialist will take you through the purchasing process.
What is the average cost of a life insurance policy in Australia?
|Cover Amount||Gender||Average Monthly Premium|
|$200,000 worth of cover||Male||$12.38|
|$500,000 worth of cover||Male||$23.13|
|$750,000 worth of cover||Male||$32.51|
|$1,000,000 worth of cover||Male||$39.54|
The above average cost of life insurance was calculated on retail life insurance policies using lifeinsurancedirect.com.au’s free online comparison tool. Calculations were based on a non-smoking 35-year-old individual living in NSW.
How are life insurance premiums calculated?
The cost of your premium will depend on the cover amount you choose, the life insurance company you’ve selected and some individual factors. Insurers will generally base standard premiums on:
- Smoking Status
- Gender, and
- The State you live in
In assessing your rates, an insurer may also ask for a medical examination. This assessment is done at the expense of the insurer.
Are my life insurance premiums tax deductible?
Life insurance, TPD and Trauma premiums are generally not tax deductible for personal insurance. Income protection premiums, on the other hand, are usually tax deductible. If you purchased life insurance through your superannuation, premiums are generally deductible to your super fund, which they can then pass on to you.
Apart from comparing premiums, you should consider other policy options like:
- Premium type. Stepped, level or hybrid premium structure.
- Built-in benefits such as free child cover.
- Premium freeze option and suspending cover benefit.
- Any exclusions or situations where the insurer will not pay
- Optional paid features like an additional amount being paid if death was due to an accident.
Life Insurance Guides
Reviewing your current life insurance policy
If you already have a policy and believe that your premiums are too costly or perhaps does not offer the range of coverage you need at this stage of your life, then perhaps it's time to see what else is out there.
It's easy to forget that your insurance needs change as your life does. Every time you increase the size of your mortgage, or your family becomes larger; your financial commitments increase with it. Likewise, as your career or income changes, your term life insurance should reflect your changing lifestyle.
However, do not cancel your existing life cover until you have your new policy in place. The last thing you want is to be an accident and unprotected while thinking about alternative policies.
Life insurance products can also change. You may find there are new solutions that better suit your life today. Are you aware of existing features within your policy?
Many life insurance companies make product updates each year, so make sure you have the latest copy of your policy's relevant product disclosure statement (PDS). The PDS outlines the benefits and clauses of your policy. If you are unsure if your PDS is the latest copy, contact an insurance specialist or the life insurance company.
How long it will take depends on the type of claim you’re making and the complexities involved, for example, if death was due to an accident. Generally, it will take up to 5 working days for your claim forms to be assessed.
How to claim life insurance benefits
Find the latest copy of your life insurance policy
Notify your insurer via telephone or in writing
Obtain a certified death certificate
Complete and submit the claim forms and other requested documentation
Benefits will be payable to your nominated beneficiary(s)
Step 3 of claiming life insurance will differ depending on your policy type. For example, when claiming for Trauma insurance, you will likely need to obtain a medical certificate providing information regarding your diagnosis of critical illness.
Be aware, that when calling your life insurance company that your calls are recorded and the information you provide might have an impact on the claim getting approved. ComparingExpert offers full claims services to all our clients.