Life Insurance Benefits and Features that Can Add Value

Published: June 21, 2018

Life insurance policies offer multiple built-in benefits and additional low-cost options that when included in your cheap life insurance policy, has the potential to enhance its value.

Selecting the right life insurance features and benefits for your unique situation can play a huge part if you ever need to make a life insurance claim. Knowing what you are covered for and the benefits it provides is essential to helping you and your loved ones’ cope during some of the worst financial and emotional times of their lives.

Compare Life Insurance Benefits

Free Comparison Free Comparison
Customised Quotes Customised Quotes
No Hidden Fees No Hidden Fees
Calculating your quotes

Why life insurance is important

Life insurance is essential if your family's livelihood depends on your financial support. A lump sum benefit can typically provide financial support to your loved ones if you pass away or get diagnosed with a terminal illness. Life insurance is especially significant if you are the sole or predominant income earner.

A life insurance benefit can be used for:

  • Paying the mortgage or rent
  • Clearing outstanding debts, including credit cards and car loan repayments
  • Day to day living expenses such as groceries and food, bills, utilities etc.
  • School fees and other educational expenses
  • Funeral costs

7 Essential life insurance features

Life insurance policies in Australia generally offer the following features:

  • Worldwide protection 24/7: Life cover is provided 24/7 anywhere in the world.
  • Cover up until age 99 or 100: Retail term life policies purchased outside of super usually expire at your age 99 or 100, depending on the insurer.
  • Tax-free lump sum payout for a self-owned policy purchased outside of superannuation.
  • Choice of premium payment structures: The most common payment structures are stepped, level and hybrid premiums.
  • The option of a standalone or bundled policy: A stand-alone policy has its own sum insured, whereas a bundled policy shares the same or lesser amount insured with either trauma or TPD attached.
  • Guaranteed renewable: In general, insurance companies cannot cancel your policy, reduce your cover or increase your premium, for a retail policy, after you've experienced a big life event, as long as you continue to pay your premiums.
  • Discount options are usually available when paying your premiums annually, and some insurers also provide discounts when you buy more than one policy from the same insurer or add your partner to your policy.

How to get the most out of your life insurance policy

Merely buying a cheap term life insurance policy does not guarantee your protection against all risks. Insurers in Australia generally include different built-in life insurance features in their policies, and if you want to enhance your coverage further, you can usually add optional benefits at an extra cost.

  • Built-in benefits: Comes standard with your life cover and is designed to enhance the policy and make them more attractive. Built-in benefits will be listed on your product disclosure statement (PDS).
  • Optional benefits: To customise your policy to your specific requirements, life companies will generally offer some additional benefits which you have the option to add at an extra cost.

Built-in benefits

Terminal illness cover

  • If you are diagnosed with a terminal illness and have less than 12 months to live, most life companies will pay your full life insurance benefit to your beneficiaries, so you are covered for death and have access to funds needed for medical expenses.

Funeral advancement benefit

  • Many policies in Australia offer a built-in funeral advancement benefit which is paid 10 to 14 working days upon receipt of a valid death certificate and completed claim forms. The funds can be used to pay for costly funeral arrangements, with the balance paid out to your estate or nominated beneficiaries after that.

CPI increases

  • To help your policy keep up with inflation, insurers will generally offer to increase your level of cover by either the CPI or a set percentage each year. The increased level of protection will usually mean an increase in your premium.

Cooling-off period

  • Most life insurance policies in Australia generally have a 28 to 30 day cooling off period after your policy commences, at which time you can change your mind and cancel the policy. You’ll receive a full refund for any premiums paid during this time.

Financial planning benefit

  • If your beneficiaries receive a lump sum benefit from your life insurance policy, select insurers will reimburse them for financial planning advice they receive.

Free children's insurance

  • Select insurers offer free children's coverage with their adult life insurance policies or with trauma policies. Cover provided is generally up to $10,000.

Guaranteed future insurability

  • You can generally increase your level of cover, without supplying additional medical information, when significant life events occur. For example, getting married, taking out a loan for your first home, increasing your mortgage, having children etc.

Premium freeze

  • If your life cover is on a stepped premium structure and your premiums are becoming a little too expensive, you can opt to freeze your premiums for a 12-month period, essentially keeping it at the existing price. Your level of cover will reduce as a result of freezing your premiums.

Suspending cover

  • You can opt to suspend your premiums and cover for up to 12 months due to financial hardship. This might also be beneficial to people not working due to extended service leave or sabbatical.

Premium waiver

  • Select insurers provides you with the ability to waive paying premiums if you are totally and permanently disabled and unable to work.

Optional benefits for an extra fee

Accidental death benefit

  • Some insurers will allow you to add an accidental death top up to your life insurance policy, which will be paid in addition to your life insurance benefit should your death be due to an accident.

Paid Child Cover

  • Select insurers offer child cover of up to $200,000.

Business guarantee option

  • Allows you to increase your business-related life insurance, without supplying additional medical information, as your business grows.

Needlestick cover

  • Select insurers offer child cover of up to $200,000. Medical professionals usually purchase this option to protect them from needle stick injuries during their regular working hours.

Accomodation benefit

  • If you have to stay 100km from your home or need a family member to stay and take care of you, this benefit will pay you a certain amount every day during this period.

Compare Features and Benefits Side-by-Side

  • Is It Legal to Have Multiple Life Insurance Policies in Australia

    You can have more than one life insurance policy in Australia. However, it depends on how reasonable it is for a person with your expected income and circumstances. Learn more about how multiple life insurance and income protection policies in Australia works and whether you can claim for all of them.
  • Compare Stepped vs Level Premiums to Find Your Best Match

    Wondering which is best, level life insurance premiums or stepped premiums? It's a question many Australians struggle with when selecting a life, income, or trauma insurance policy. We reveal what you need to consider before choosing a premium structure and which type might be best suited to your specific circumstances
  • How To Get Cheap Life Insurance In Australia Without Compromising on Value

    We reveal 11 ways you can keep your premiums affordable. To make sure you get value for money, first calculate how much cover you need, compare policies from Australia’s leading life insurance companies and make sure you understand what you’re buying. Compare cheap life insurances quotes online in less than 60 seconds.
  • Buy Back Options

    Buy Back options on your Life Insurance Policy can be a built in benefit or you can generally add this option on your bundled policy at an additional cost.">
  • Bundling Life Insurance With TPD & Trauma Cover

    Bundled insurance can include a combination of TPD or trauma cover with your life insurance policy which saves you money compared to buying stand-alone policies

Ask an Expert?