Keeping up with your premium payments it's crucial to prevent your policy from lapsing. Unfortunately, circumstances do change, new expenses arise and it’s not always possible to keep up with premiums.
What you need to know
You may be able to freeze your premiums which stops your premiums from increasing.
You can reduce costs in other ways - for example, by switching insurers.
1. Premium freeze
A premium freeze lets you stop your premiums from increasing as you age. It's only available with stepped premium life insurance policies because the cost rises with age.
Typically it can last until you choose to cancel it, or make a claim or adjust your level of cover in some other way. You will still have to pay premiums but the price won't increase with time, as long as it's active – however, your level of cover will drop.
Not all policies will include this option. If you’re interested, check whether your current policy includes it or if it’s available with new policies.
Limited window to activate option. If your premiums have recently gone up, you may have a limited window in which to activate a premium freeze. Typically a premium freeze must be activated within 30 days of policy renewal.
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Our team of life insurance experts have researched and rated dozens of policies as part of our Finder Awards and published 250+ guides to make it easier for you to compare.
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Unlike other comparison sites, we're not owned by an insurer. That means our opinions are our own and we work with lots of life insurance brands, making it easier for you to find a good deal.
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Since 2016, we've helped 270,000+ people find life insurance by explaining your cover options, simply and clearly. We'll never ask for your number or email. We're here to help you make a decision.
FAQs about life insurance premium freezes
Yes. You can generally unfreeze your policy whenever you are ready, but certain conditions might unfreeze it sooner, depending on your policy. It may unfreeze when you make a claim, reach the next policy renewal date, change your sum insured or otherwise adjust your cover.
It might be the right option if your premiums are becoming unaffordable. However, there are downsides, so it's a good idea to consider the other alternatives first.
If your premiums go unpaid for too long, you will lose your cover. If they continue to go unpaid, your policy will be cancelled altogether.
A common mistake is to cancel your life insurance policy when the cost gets too high. If you do this, it will probably cost more to sign up again later, because you'll be older and might not be as healthy as you were before.
The good news is that you don't need to do this. Everyone's financial situation will change from time to time, and insurers have several options to make sure you don't need to cancel your cover.
Finder survey: Do Australians typically have stepped or level life insurance premiums?
Response
I don't know
49.04%
Level
35.25%
Stepped
15.71%
Source: Finder survey by Pure Profile of 1110 Australians, December 2023
Which insurers may offer premium freezes?
Here are some of the brands on Finder that offer premium freezes.
Request a premium freeze at any time. This means your future premiums will be fixed at the amount you were paying on the date you notified the provider. amount.
If you're paying premiums on a stepped basis, you can request a premium freeze on your life, TPD or trauma cover at any time. This excludes policy fees and government charges.
Note that premium freeze options will reduce your sum insured amount and might not be available in super policies. Data taken from brand product disclosure statements, June 2021. Benefits, conditions and amounts are subject to change at anytime.
2. Temporarily suspend your cover
Unlike a premium freeze which merely stops premiums from increasing, this option means you stop paying premiums entirely. However, you will typically lose all your cover, and cannot make claims for anything that occurs while your cover is suspended. Not all life insurance policies will include a suspended cover benefit, and where they do it may be variously known as a premium holiday, premium pause or other variation.
Suspended cover works differently between insurers and policies. Some may require you to provide evidence of financial hardship while others might let anyone suspend cover without condition.
Length of suspension. Some insurers might let you suspend cover for a full year, while others will limit you to only a few months.
Terms and conditions will apply. For example, you might be limited to only one premium suspension over the policy lifespan, and it might be restricted to no more than three months. Make sure you are familiar with all conditions before committing to this option.
This will depend on your personal circumstances. Some examples where suspending cover might be a sensible cost-saving measure include:
If you’re between jobs
If you’re on long-term leave
When you’re otherwise not earning your typical income
3. Other ways to reduce your life insurance premiums
Life insurance policies are often more complex and multifaceted than others. This can make it more difficult to navigate, but also means there are many ways to reduce costs.
Reduce your sum insured. If you've used the premium freeze option, you may want to consider reducing your cover before cancelling your policy altogether. For example, if your current benefit amount is $1 million, you might be able to save by reducing it.
Remove CPI increases. Every year you hold life insurance cover, it will automatically increase to keep up with inflation. One more way to reduce the cost of your premiums is to request to your insurer to remove the increase. You can usually do this in writing or over the phone.
Gary Ross Hunter is an editor at Finder, specialising in insurance. He’s been writing about life, travel, home, car, pet and health insurance for over 6 years and regularly appears as an insurance expert in publications including The Sydney Morning Herald, The Guardian and news.com.au. Gary holds a Kaplan Tier 2 General Advice General Insurance certification which meets the requirements of ASIC Regulatory Guide 146 (RG146).
While it's possible to have multiple life insurance policies, can you receive payment from more than one if you claim? Read on to find out.
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