It's possible to get life insurance at a cheaper rate without skimping on the quality. Just follow these 3 quick steps to get cheap life insurance quotes:
Understand your personal needs. That is, how much cover you need and what type.
Compare multiple quotes. Review either online or with an adviser for a cheaper quote. We've picked out 2 of the cheapest just below.
Avoid extras if you don't need them. For instance, drop the additional trauma cover if you only need basic life cover.
2 of the cheapest life insurance policies available
NobleOak Life Insurance. For $500,000 in cover, you'll pay $24.94 per month for males and $19.46 per month for females.
AIA Life Insurance. For $500,000 in cover, you'll pay $21.57 per month for males and $16.07 per month for females.
Based on quotes taken out through insurer websites and using our quote engine. These 2 policies were picked from a comparison of 19 policies. Prices may vary based on your age. Last checked May 2019.
Although price depends on circumstances, in our example below we found it possible to get $500,000 of life cover for less than $17 per month (females) and less than $22 per month (males) with AIA Priority Protection.
Example: $500,000 in life insurance cover for a 35-year-old
When you purchase RAC Life Insurance, WA residents receive complimentary RAC membership which includes access to discounts on fuel, savings on shopping, entertainment and more.
*Premium rates are based on a policy taken out in NSW by a non-smoker for a sum of $500,000. | Quotes are a rough estimate and don't take into account your personal situation. | Figures are correct as of February 2019 and are subject to change. We took out quotes for the policies we compare on Finder that allow for online quotes. There may be some policies in the market that aren't covered here.
7 life insurance hacks every consumer should know about
1. Live a healthy lifestyle to earn discounts on your cover
Health and wellness programs are big business these days, with insurers focusing on reducing their risk by encouraging members to lead healthier lifestyles. Examples of popular health-related rewards programs include:
AIA Vitality. Members are rewarded with discounts from commercial partners as they earn Vitality points and their health improves, leading ultimately to discounts on their life insurance premiums. Discounts include gym memberships, Weight Watchers, gift cards, movie tickets and cheap airfares. After an introductory discount of up to 7.5% on your first year's life, TPD or trauma insurance, you can also earn up to a 20% discount on your premium if you attain Platinum status on your Vitality membership.
Asteron Life Plus Program. You can earn a discount on your premium by setting goals to improve your health and wellbeing and tracking your progress using blood pressure, body mass index (BMI) and cholesterol checks. Complete the program successfully and you will be eligible to receive a maximum discount of 20% off your insurance premium.
Bupa Living Well. This provides additional benefits on your extras cover that you can use toward the cost of programs that are part of a health management strategy for a specific health concern and recommended by a healthcare professional. Living Well also gives you access to a range of discounts on health club memberships, health-related products, optical products, Weight Watchers and entertainment.
Some brands let you earn frequent flyer points on your premium
2. Look for a brand that integrates frequent flyer programs
Some brands let you earn frequent flyer points from what you spend on your premium. Some policies even offer bonus points when you sign up.
These are similar to health and wellness programs, except the emphasis is not so much on health as on more tangible rewards such as shopping, entertainment and travel discounts. Typical rewards programs include:
OnePath Frequent Flyer Program. If you're a Qantas Frequent Flyer member, you can earn 1 point for every $1 on your premium for OnePath Life Insurance (up to 20,000 points per year, per policy).
3. Maintain your policy with the same insurer
Loyalty discounts are an insurer's way of saying thank you for maintaining your policy with it over time. This might take the form of a premium discount or an increase in the benefit paid. Typical examples include:
CommInsure Loyalty Bonus. If you've been with CommInsure for 5 years or more, it will increase the benefit payable on your life cover, TPD cover, child cover, trauma or terminal illness cover by 5% at no extra charge.
NRMA Insurance Loyalty Discount. Depending on how many policies you have and the number of years you have held them, you can save up to 10% on your premiums.
Real Life Insurance Real Reward. After 12 months, receive 10% back from the premium you paid on your life insurance.
4. Take out more than 1 type of cover
Many policyholders take out life insurance and then add another policy, for example income protection. A multi-policy discount can sometimes apply when you are covered by multiple policies. Examples include:
MLC Multi Policy Discount. Receive a discount of up to 30% on income protection by bundling your life cover, TPD and critical illness cover with income protection and funding at least 1 insurance through your super on an eligible MLC account.
5. Combine cover with a spouse
Many life insurers will offer a premium discount if you and your partner both apply for cover at the same time. Multi-life policy discounts can be as high as 10% of your premium, depending on the insurer. Comparing online or with a financial adviser is a great way to find a discount that offers the best value on applications.
6. Look for free premium offers (on the first month)
There's no such thing as free life insurance, but some insurers will offer you a limited initial period of cover free of charge as an incentive for taking out a policy with them. Examples include:
NobleOak Life Insurance. No premium is payable in the first month after taking out a policy.
Zurich Australia. Take out Zurich Ezicover Life Insurance and the first month's premium is free for all applicants.
7. Insure a higher sum for a bulk discount
Another incentive you can take advantage of to save on your life insurance is a higher cover discount. This is a discount on your premium if you select a higher benefit amount. Typical examples include:
Virgin Life Insurance. Get a 25% discount on your premium when you purchase more than $500,000 in cover.
Insuranceline Life Insurance. Get a 15% discount on your premium when you purchase cover for an amount over $400,000.
What makes life insurance cheaper (or more expensive)?
There are many factors that go into determining your life insurance premium including:
Your age. The earlier you apply for cover, generally the cheaper your premium.
Your gender. Whether you’re a man or a woman will affect your life insurance premium as women tend to live longer than men.
Your job. If you’re in a profession that is considered “safe” you’ll pay less than someone in a high risk category.
If you smoke. Smokers will generally pay almost double for life insurance than a non-smoker.
The type of cover you want. If you’re after just life insurance, you’ll pay less than someone after a full suite life, trauma, income protection and total permanent disability cover.
How much cover you want. The amount you choose to insure yourself also plays a major role. For example, someone insuring themselves for $100,000 will pay significantly less than someone who’s insured for $1.5 million.
How long you want cover. While it won’t affect the cost of your policy, obviously the longer you have cover the more you’ll pay. The number of years you have cover for is referred to as the “term” of the policy.
Your general health. If you’re fit and healthy you’re going to pay less than someone with a long medical history.
Your lifestyle. In the same vein as those that choose to smoke, those that participate in dangerous activities are going to pay more than those that take fewer risks.
Retail policies are life insurance policies that you’d buy after seeking financial advice from a life insurance broker or adviser.
Pros
Cons
Choose the amount you’re covered for
Underwriting process (but this means you know what you're covered for upfront)
Guaranteed renewable
Need to speak with an adviser
Retail policies have the lowest average declined claim rate (7%)
Benefits are indexed
Premiums are generally cheaper
A direct or (non-advised) life insurance policy is one you’d buy directly from an insurer without the aid of a broker, an adviser or super fund.
Pros
Cons
Guaranteed renewable
Direct policies have the highest average declined claim rate (12%) unless they are underwritten
Can be obtained online or over the phone
Cover is more expensive
Little to no medical underwriting on most policies
You’re required to do more work to understand cover
Can cost less in some cases
Group life insurance policies are issued to third parties such as your super fund, who then in turn allow you to access cover as a member of their fund.
Pros
Cons
Retail policies have a low average declined claim rate (8%)
Drain on retirement savings
Automatic acceptance in most cases
Lower benefit payments
No “out-of-pocket” fees
Benefits are not indexed
Are there any downsides to buying cheap policies?
The major danger of buying a cheap life insurance policy is getting a policy that won't cover your lifestyle or not be getting cover that is suited to your situation.
Not being covered for your lifestyle or health conditions
Another mistake people make is purchasing life insurance directly without a medical questionnaire. While this is quick and can sometimes save you cash on the premium, this policy will automatically exclude any pre-existing medical conditions. You won't know this until claim time.
If you want to buy cheap life insurance without having to go through the hassle of a medical examination, then you may want to consider direct life insurance. The advantage of this policy type is that the application process is very straightforward, with little to no medical underwriting required. It can be convenient for:
Those who know exactly what they need in a policy
Those who understand how the specific policy works and don't need the help of an adviser
However, the lack of medical underwriting can be a double-edged sword due to:
Insurers making assumptions on your health and the level of risk you carry due to you not having to undertake a medical examination.
This can result in your premium rates being higher compared to obtaining life insurance which has a more stringent medical underwriting process.
Underinsurance in Australia
While the number of Australians with life insurance is on the rise thanks in part to superannuation, the amount of cover we have is on the whole inadequate, according to Rice Warner.
Current insurance vs needs
Amount
Typical default life insurance cover inside super
$200,000
Approximate amount of life insurance needed by Australians
$680,000
Underinsurance gap
-$480,000
The major danger of buying a cheap life insurance policy is that you might not be getting cover that is suited to your situation. This is a growing issue in Australia and it’s called underinsurance.
Review your policy regularly. In particular at specific life events. You may find that you may need to increase your coverage, especially at the time your financial obligations are highest. You can also decrease your coverage if you have smaller financial commitments.
Know what life events your policy covers. These often include events such as marriage, divorce, taking out a mortgage, buying a house, the birth of a child and the death of a spouse or partner.
Take advantage of guaranteed insurability. Most cheap life insurance providers offer a guaranteed insurability feature on their policies, either built in or at an additional cost. This allows you to increase your life insurance coverage at a nominated date (birthday or policy anniversary) without having to submit further medical evidence on significant life events.
Can you get life insurance without doing a medical exam?
If you want to buy cheap life insurance without having to go through the hassle of a medical examination, then you may want to consider direct life insurance. The advantage of this policy type is that the application process is very straightforward, with little to no medical underwriting required. It can be convenient for:
Those who know exactly what they need in a policy
Those who understand how the specific policy works and don't need the help of an adviser
However, the lack of medical underwriting can be a double-edged sword due to:
Insurers making assumptions on your health and the level of risk you carry due to you not having to undertake a medical examination.
This can result in your premium rates being higher compared to obtaining life insurance which has a more stringent medical underwriting process.
Find the best price by comparing
There are many benefits from leveraging the Internet to compare your life insurance options.
Use online tools to get a quote. You can compare multiple life insurance policies at once to secure the best deal to suit your needs and budget.
Get help and assistance with an adviser. Understanding complex features in a life insurance policy does not need to be difficult. With the help of an insurance adviser, you can get access to tailored recommendations on different policy options suitable for your personal circumstances.
Compare low-cost options from popular Australian brands
* The products compared on this page are chosen from a range of offers available to us and are not representative of all the products available in the market. There is no perfect order or perfect ranking system for the products we list on our Site, so we provide you with the functionality to self-select, re-order and compare products. The initial display order is influenced by a range of factors including conversion rates, product costs and commercial arrangements, so please don't interpret the listing order as an endorsement or recommendation from us. We're happy to provide you with the tools you need to make better decisions, but we'd like you to make your own decisions and compare and assess products based on your own preferences, circumstances and needs.
Richard Laycock is Finder’s insights editor after spending the last five years writing and editing articles about insurance. His musings can be found across the web including on MoneyMag, Yahoo Finance and Travel Weekly. Richard studied Media at Macquarie University and The Missouri School of Journalism and has a Tier 1 Certification in General Advice for Life Insurance.
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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