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Family Life Insurance in Australia: Balancing Protection and Affordability

In Australia, life insurance can often be a crucial safety net for families. It’s about preparing for the unexpected, ensuring your loved ones are financially secure if you cannot work. This protection extends beyond just covering expenses; it’s about the peace of mind of knowing your kids and partner are taken care of.

Russell Cain

Fact Checked

Updated: 19 May 2024

Understanding and managing the costs of life insurance is key. It’s a strategic investment in your family’s future, offering a balance between comprehensive protection and affordability. In the event of your absence, a lump sum payment could provide your family with financial stability and peace of mind during challenging times.

Key facts

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What is Family Life Insurance?

While specific family life insurance policies may not be available, it typically refers to the structuring of a policy to not only cover yourself but also your partner and or children under the one policy with the same insurer. Allowing for the entire family to be protected.

While there can be benefits to this approach e.g.: Cheaper premiums, it can also sometimes be more cost-effective and allow more flexibility by having each parent go with a different provider to get the most cost-effective based on each parent’s unique requirements.

Types of Policies Available

Understanding the various options available can be crucial in safeguarding you and your family’s financial future. Each type of insurance generally serves a unique purpose, offering protection tailored to specific life events. Let’s break down these options to help you decide which coverage best suits your requirements.

Selecting the
Right Policy

When choosing the right insurance policy, it’s essential to consider your family size, children’s ages, and your family’s primary earners’ income. Larger families often need more comprehensive coverage, while smaller ones might require less. The age of your children may also influence the duration, sum insured and type of coverage needed, ensuring support through their developmental years.

Assessing Your Family’s Coverage Requirements

Planning for the Future

In choosing an insurance policy, thinking ahead about life’s changes is important. Whether it’s expanding your family, advancing in your career, supporting your children’s education, or planning for retirement, your insurance requirements will evolve over time. Regularly reviewing your cover is key to ensuring long-term security and peace of mind for you and your loved ones.

Understanding Your Coverage

When selecting a life insurance policy, it’s crucial to understand the common inclusions and exclusions. Policies typically cover death due to illness or accident but may exclude certain conditions or activities. It’s important to read the fine print to know exactly what is and isn’t covered.

Additional Benefits

How Much
Does Family Life
Insurance Cost?

The cost of family life insurance hinges on several personal factors. Age and health are primary influences; younger and healthier individuals typically face lower premiums. As you age or if health risks are present, expect these costs to increase. Additionally, lifestyle choices play a significant role. Habits like smoking or engaging in high-risk activities can lead to higher premiums due to the increased risk they pose.

Ways to Manage Costs

Frequently Asked Questions and Answers

When selecting a policy, consider your financial obligations (like debts and household expenses), future plans (such as children’s education or retirement), and family dynamics (number of dependents, age of children). These factors help determine the coverage that best fits your family’s unique needs.

Yes, many policies offer flexibility to adjust coverage as your family’s requirements change. This could include increasing coverage (subject to underwriting) for growing families or reducing cover as children become independent. Reviewing your policy regularly and discussing changes with your broker is important.

In Australia, life insurance payouts are generally tax-free when the policy owner is an individual or within super when the benefit is paid to financial dependents (as defined by the ATO). However, tax implications can vary based on individual circumstances and policy types. It’s advisable to consult a tax professional for specific advice.

A basic method is to add up all your debts, and ongoing and future household expenses (like education or living cover) less any assets you are willing your family to sell to cover these. This gives you a good starting point, then you can further adjust by reducing for any other insurance policies that may offer you similar cover, and looking to have it fit within your budget.

The beneficiary or executor will typically need to contact the insurer and complete the required claim forms to make a claim. They’ll need to provide documentation, such as a death certificate. The time frame for processing claims can vary.



Russell is the founder and CEO of Life Insurance Direct and has been quoted in The Sydney Morning Herald, The Age, Independent Financial Adviser, Risk Adviser, Adviservoice, and Insurancenews. Russell has over 15 years’ experience in the Australian life insurance & financial services sector and is instrumental in driving the latest innovations in our insuretech platform.

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