Life insurance doesn't have to break the bank. Find affordable cover by following these tips.
The misconception that life insurance is too expensive often deters Australians from getting decent cover. But you can get an affordable life insurance policy without sacrificing cover quality or breaking your budget.
How do I obtain life insurance that I can afford?
- What insurance suits your needs. Where you are at in your life and your personal circumstances has an impact on how much cover you will need.
- Understanding the different features of a policy. Features such as premium type can affect how much you pay.
- Compare your options. Reviewing policies online and with a consultant can help you find an affordable policy that still covers you adequately.
The safety and wellbeing of your loved ones is important to you, so it is crucial to ensure that there is a form of protection in place should you no longer be around to care for them. This article will explore different types of life insurance plans to consider and tips on how to find suitable cover for you that is still within your budget.
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There are a number of different types of life insurance plans available in Australia, with each designed to provide financial assistance in the event of an illness, injury or death. These include:
- Life Cover. Is also known as term life insurance and it provides a lump sum payment to your nominated beneficiaries if you were to pass away or have been diagnosed as terminally ill with no more than 12 months to live.
- Total and permanent disability insurance. This is a type of living insurance that provides a lump sum benefit in the event that you have been permanently disabled and you are unlikely to work ever again.
- Trauma insurance. This is another type of living insurance, which provides a lump sum payment upon a diagnosis of a life-threatening medical event, such as cancer, heart attack, major organ transplant, open heart surgery and multiple sclerosis.
- Income protection. Is designed to provide a replacement income in the event of a serious illness or injury and you are unable to work temporarily. It provides an monthly benefit generally of up to 75% of your average income.
- Funeral insurance. Provides a lump sum benefit to your beneficiaries to fund your funeral arrangements and any related expenses.
Your needs will change over time as you go through different stages of life, so will your insurance needs. Life insurance is important to have, even if you have a limited budget. There are number of different ways that you can organise your life insurance policies to suit your personal circumstances, and not sacrifice too much of your day to day budget.
|Life stage||Life insurance plans to consider||Common expenses to cover|
|1. Young and single|
|2. Young working adults or couples|
|3. Young families|
|4. Maturing families|
Direct life insurance means skipping advisers and retailers and buying direct from an insurer. Direct life insurance is fast and convenient to purchase, since you can be it quickly online.
Is direct life insurance cheaper?
Many insurers offer discounts for buying direct, but this doesn't always guarantee you'll get the cheapest deal. Direct life insurance policies usually have less options and aren't always tailored to your specific cover needs. You might end up paying more for features you don't need, or saving money only to find that your policy doesn't cover you when you need it most.
As always, know your cover needs, shop around and read the fine print.
Direct life insurance offers
|Virgin Life Insurance||Choice of cover options and adjustable premiums to suit your budget. Fast application without a lock-in contract.|
|American Express Term Life Insurance||Pay nothing in premiums for the first month. Discount up to 10% available when multiple policies are purchased.|
|NobleOak Term Life Insurance||Save 25% on NobleOak life insurance with no premium payments in the first month.|
|ANZ Life Insurance||Fast cover application and flexible payment options.|
|Zurich Ezicover Life Insurance||Get up to 10% discount when multiple policies are purchased.|
Understanding the different types of premiums can help you save money in the long term or short term depending on your personal preference.
- Stepped. Premiums that start off low but rise as you get older.
- Levelled. Premiums that stay the same for the life of your policy. These premiums generally start off higher than stepped premiums but end up costing less in the long run.
- Hybrid. This is a combination of stepped and levelled premiums. It generally starts off as a stepped premium and then converts to a levelled premium later on.
There are a number of policy features that you should look out for when comparing different life insurance plans and to ensure affordable premiums that are within your budget.
- Joint life insurance policies: When applying for a life insurance policy, consider coverage for your partner/spouse as well. Most insurance providers will offer a discount on your monthly premiums for a joint policy.
- Child cover: Some insurers may offer free or discounted children’s cover when you take out life insurance.
- Payment options: You have the flexibility to choose your premium payment frequency, either on a fortnightly, monthly, quarterly or yearly basis. You will be eligible to a discount when you opt for an annual payment.
- Superannuation rollover: Holding life insurance through your superannuation is affordable, however, the features on offer are often quite limited. If you are looking for more comprehensive cover and still retain your premium payments through super, consider rolling over your complying super fund to a superannuation account organised under an insurance company.
Life insurance discounts for certain policies
You may be eligible for discounts on your life insurance policy if you have multiple policies, joint policies, or policies where the cover amount exceeds a certain level. These discounts can be significant. It's always a good idea to ask what discounts are available when shopping for insurance.
A multi-policy discount usually applies when you combine more than one type of cover (e.g. Income protection with life insurance) with the same provider.
|AIA||Up to 12.5% discount||Speak to an adviser|
|AMP Elevate||Up to 5% discount||Speak to an adviser|
|Asteron||Up to 5% discount||Speak to an adviser|
|BT||Up to 5% discount||Speak to an adviser|
|MLC||Up to 30% discount||Speak to an adviser|
|OnePath||Up to 5% discount||Speak to an adviser|
A joint policy discount usually applies when you apply for cover cover either with a spouse or another family member.
|Provider||Joint policy discount/Family discount||Conditions||Apply|
|ANZ||You may receive a discount||Speak to ANZ directly to find out if you're eligible||Get a quote|
|Zurich Ezicover||Get a quote|
|InsuranceLine||The younger adult receives a discount when you apply on the same policy||Get a quote|
|Virgin||No conditions stated in PDS||Get a quote|
|AIA||Annual premiums for each must at least by $500||Speak to an adviser|
|AMP Elevate||Speak to an adviser|
|Asteron||You might be eligible for discounts if you apply at the same time with immediate family members or business partners in the same entity||Speak to an adviser|
|ClearView||Discount available at the time of application where there is a family group relationship or businessrelationship between the persons insured.||Speak to an adviser|
|OnePath||Available if you link your policy with an eligible family member, business partner or combination of family members and business partners||Speak to an adviser|
A larger sum discount applies when you purchase cover for a sum over a set amount defined by the insurer.
|Provider||Higher cover discount||Conditions||Apply|
|Virgin||25% discount available for any cover above $500,000||Premiums must be paid within 30 days of the due date||Get a quote|
|InsuranceLine||Up to 15% discount||Size of discount depends on the amount of cover insured and the type of cover that's insured||Get a quote|
|AIA||Up to 30% discount||Size of discount depends on the amount of cover insured and the type of cover that's insured.||Speak to adviser|
|AMP Elevate||Up to 36% discount||Size of discount depends on the amount of cover insured and the type of cover that's insured||Speak to adviser|
|Asteron||Discount available (Check with an adviser)||Size of discount depends on the amount of cover insured and the type of cover that's insured||Speak to adviser|
|BT||Up to 30% discount||Size of discount depends on the amount of cover insured and the type of cover that's insured||Speak to adviser|
|ClearView||Up to 24% discount||Size of discount depends on the amount of cover insured and the type of cover that's insured||Speak to adviser|
|OnePath||Up to 32% discount||Size of discount depends on the amount of cover insured and the type of cover that's insured.||Speak to adviser|
|TAL||Up to 34% discount||Size of discount depends on the amount of cover insured and the type of cover that's insured||Speak to adviser|
|Zurich Future Wise||Up to 24% discount||Size of discount depends on the amount of cover insured and the type of cover that's insured.||Speak to adviser|
If you are on a tight budget, it doesn’t mean that you can’t obtain quality life insurance cover with affordable premiums. There are a number of ways to find a policy that suits your needs, while keeping the cost of cover down.
Some of the ways in which you can reduce the cost of your life insurance cover include:
- Shop around: It is important to remember that the cost of life insurance cover can vary from one plan and provider to another, so it can really help to shop around. You will be surprised to see how much you can save when you browse and compare life insurance plans. There are a number of different factors that can affect the cost of your cover, such as your general health, your occupation, the level of coverage you are looking for, etc.
- Speak to an insurance adviser: With so many different policies and insurers on the Australian market, finding the right cover to suit your needs on your own can be overwhelming. Therefore, consider speaking to an insurance consultant who can help you in finding the right policies for you and securing competitive prices for your cover. This can help you to save money on the cost of your life insurance as well as to save yourself time when it comes to finding suitable cover.
- Make some lifestyle changes: While you will be able to benefit from lower premiums due to your younger age, you could find yourself being penalised for certain lifestyle choices that could be seen as increasing the risk of ill health and death. This could include smoking, excessive drinking and poor diet/ lack of exercise contributing to unhealthy weight. Making changes to these areas, such as quitting smoking, improving your diet and losing weight, and cutting back on your drinking could help to decrease the cost of cover as well as ensuring you lead a healthier life.