We understand that securing the cheapest life insurance that suits your requirements can be a challenge. We aim to make it easy for you to compare the most affordable life insurance policies available in Australia today. Learn more about life insurance costs and the features and benefits that you should be aware of.
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Compare cheapest life insurance Australia
Life insurance costs per month Australia often vary, which is why it’s important to compare policies. We’ve put together the table below to help you determine how much life insurance costs per month. It’s important to note that the cheapest life insurance in Australia can vary depending on how much cover you need. You may find the cheapest life insurance rates by comparing multiple quotes.
Insurer | Monthly Premium |
 | $28.42 |
 | $29.79 |
 | $31.48 |
 | $32.67 |
 | $34.11 |
 | $34.48 |
Source: Life Insurance Direct Comparison Engine (August 2023); Premium estimates based on $1 million worth of life insurance for a 35-year non-smoking male, living in NSW with Variable Age-Stepped premiums).
What impacts the affordability of my life insurance rates?
It’s important that you don’t confuse affordability with value. A cheap life insurance policy won’t necessarily offer you what you require regarding coverage and could end up costing you more when your claim payout is not sufficient.
The top 8 factors that affect your life insurance premiums
Your level of cover
A higher cover amount usually equals a more expensive premium. However, generally, if you purchase a significant amount of cover you’ll pay less per $1,000 of the total amount.
It’s important to choose a level of cover that is appropriate to your circumstances and budget. You might want to first speak with your broker to help you determine the right amount of life insurance you need based on your current income, family structure, and other financial commitments.
How much life insurance do I need?
First, calculate your financial obligations: Multiply your annual salary by the number of years you want to replace your income for, taking into account your debts, mortgage balance, and potential future needs (children’s education).
Second, determine your liquid assets: Savings, plus financial investments, plus your existing life insurance.
After that, subtract your liquid assets from your financial obligations to get an estimate of the amount of life insurance you need.
Premium type
Your insurer will generally provide you with a choice between Variable Age-Stepped, Variable, and hybrid premiums.
- Variable Age-Stepped premiums: Your premiums start out more affordable, but will increase as you age. This premium style is cheaper in the short-term as you only pay for the level of risk associated with your current age. Keep in mind that your premiums will increase as you get older and could become unaffordable in the long-run.
- Variable Premiums: Premiums start more expensive than Variable Age-Stepped premiums but don’t increase annually with your age. Variable Premiums generally only increase due to the automatic Consumer Price Index (CPI) increases.
- Hybrid premiums: Select insurers will offer you the premium option that gives you the best of both worlds. Your premiums start out slightly higher than Variable Age-Stepped premiums and usually increase annually until your policy reaches a pre-agreed upon age. Your premiums then convert to Variable Premiums and generally only incur CPI increases. Some insurers may convert your premiums back to Variable Age-Stepped premiums and continue with annual increases when you reach the age of 65+ years old.
Your level of cover
A higher cover amount usually equals a more expensive premium. However, generally, if you purchase a significant amount of cover you’ll pay less per $1,000 of the total amount.
It’s important to choose a level of cover that is appropriate to your circumstances and budget. You might want to first speak with your broker to help you determine the right amount of life insurance you need based on your current income, family structure, and other financial commitments.
Your age
The younger you are, the cheaper your premiums will usually be because you’ll generally be healthier and more active and thus a lower risk of possibly claiming in future. That’s why you’re encouraged to take out cover as soon as possible and not leave it until you’re much older and incur higher premiums as a result.
If you’re young, single and without dependents, a good place to start might be in purchasing income protection and critical illness cover, so you can cover your day to day expenses should you become ill or injured for a specified period of time.
Family history
Certain diseases are considered to have a hereditary component. For instance, if you have a history of breast cancer in your family, it will usually be taken into consideration when calculating your overall risk.
If you have such a family medical history, the insurer might add an exclusion or loading to your policy depending on the insurer and their underwriting guidelines. The insurer may also request that you go for a medical exam.
Lifestyle (high-risk activities)
Individuals participating in high-risk activities, like rock climbing or skydiving, might be rated as a higher risk. Thus you could pay a higher premium or have an exclusion on your policy, depending on the insurer. The same applies to your occupation, all things being equal, a person working a desk job might not pay as much as a person working in a mine.
It’s important to check with your insurer and fully disclose your hobbies. What one insurer considers high risk, another may not.
Your location
The state you live in may affect your life insurance premiums. If your area is statistically proven to be dangerous and reflects a higher mortality rate, then you are more likely to incur higher premiums.
Built-in benefits vs paid options
Generally, a life insurance company which has included a variety of built-in benefits with their life cover might charge higher premiums because they are seen as offering more value.
It might be more affordable to find a basic life insurance policy without all the bells and whistles and only pay for the additional features and benefits you want.
How much life insurance do I need?
- First, calculate your financial obligations: Multiply your annual salary by the number of years you want to replace your income for, taking into account your debts, mortgage balance, and potential future needs (children’s education).
- Second, determine your liquid assets: Savings, plus financial investments, plus your existing life insurance.
- After that, subtract your liquid assets from your financial obligations to get an estimate of the amount of life insurance you need.
What to consider before choosing the best cheap life insurance company
Are you considering life insurance as a possible option to protect your family after your passing? Have you been trying to find cheap life insurance but can’t seem to really find an affordable rate? Well, don’t give up! There are many great tips and tricks on how to save money on life insurance.
- Review your insurance needs and decide how much cover you require so as not to be underinsured or overinsured.
- Inquire about the company’s financial strength, stability, and reputation for paying out claims.
- Read customer reviews could tell you a lot about a company’s trustworthiness and how your loved ones are likely to be treated at claim time.
- Consider the whole family, not just the policyholder and insured person.
- Ask questions as soon as you’ve found a broker or life insurer you are comfortable with. The more clarity you have on what is and what isn’t covered the easier it will be to agree on a policy that suits your requirements.
11 Ways you can keep your premiums affordable
- Ask your insurer to remove the Consumer Price Index (CPI) increase, which is generally automatically applied to insurance policies. Take note; your policy will no longer keep up with inflation.
- Choose Variable Premiums, or ask your insurer whether you can switch a Variable Premium structure and whether they offer hybrid premiums.
- Lower you cover amount. If you have reached retirement age and no longer have dependents or a mortgage to pay off, decreasing the amount of cover you have might be an option.
- Make lifestyle changes, like aiming for a healthy BMI range and quitting smoking. After you’ve stopped smoking for 12 months, life insurance companies will generally rate you as a non-smoker.
- Remove optional extras. Review your policies annually to make sure you’re cover is still relevant to your current circumstances and remove unnecessary paid for options.
- Compare quotes from Australia’s top 10 life insurance companies to find the one that best fits your budget and requirements.
- Look for insurers that have removed policy fees from their premiums, like ClearView Life Solutions and Acenda.
- Bundle policies if your insurer allows it and it makes financial sense. Bundled policies generally cost less than taking out separate stand-alone policies.
- Purchase cover when you’re young because you might pay lower premiums due to your good health.
- Pay your premiums annually and save between 5-8%.
- Ask whether an insurer offers discounts when purchasing multiple policies (for you and your spouse) or multiple types of cover (for example life cover and income protection) from the same insurer. Also, query whether they have a rewards program you can benefit from.
Cheap life insurance isn’t always better
It’s important that you don’t confuse affordability with value. A cheap life insurance policy won’t necessarily offer you what you require regarding coverage and could end up costing you more when your claim payout is not sufficient. Of course, you do need to ensure that your cover is affordable, especially in the long-run, but you also need to remember that the cheapest policy may prove insufficient, leaving your family financially vulnerable.
Frequently Asked Questions and Answers
How to get cheap life insurance quotes online?
This best way to find affordable life insurance quotes online is to visit an insurance comparison website and request quotes from the leading life insurance companies, then comparing their benefits, features and price side-by-side. Keep in mind that you’re more likely to find the right cover at the lowest price when comparing apples with apples, i.e. similar policy types offering more or less the same level of cover.
Will your premiums stay the same each year?
This typically depends on the type of premiums you opted for when you first applied for your life insurance policy. If you have a policy with Variable Age-Stepped premiums your premiums will typically increase yearly. However, if you have a policy with Variable Premiums, they’ll generally stay the same. If you’re unsure about which type of premium structure you have, it’s usually a good idea to refer to your Policy Disclosure Statement (PDS).
Should you cancel your life insurance if you can no longer afford it?
No, typically there are several other options you could try before cancelling a policy you can no longer afford. If you are no longer able to afford your policy, you could speak with your insurer about freezing your premiums. Alternatively, you could compare quotes to find a new policy that suits your requirements as well as your budget.