Life insurance is there for you in life emergencies. Because there's more than one way in which your life can change unexpectedly, insurers offer specific policies for various different scenarios and needs. We've broken down the main ones down for you below.
Compare the 6 main types of life insurance in Australia
Provides cover in the event of accidental injury /death (no sickness cover)
18 - 64
What type of life insurance do you need?
Take our short quiz to find out what type of life insurance may be best for you.
The following calculation is an estimate based on your answers. There are limitations. You should always speak to an adviser to get a clearer understanding of your needs and the right mix of insurance for you.
Life insurance
Life insurance pays your loved ones (the person or persons you select as beneficiaries) a lump sum payment when you die or are diagnosed with a terminal illness. You can choose the amount they'll receive – the maximum sum insured limit is generally around $1 and $15 million. Life insurance is sometimes also referred to as life cover or death cover.
Who needs life insurance?
Consider life insurance if these are your priorities:
Owning a home
If you were to die unexpectedly, a mortgage would be left behind for your partner to deal with.
Starting a family
If you died unexpectedly, the cost of raising your children would be left for your partner to manage.
Planning retirement
If you're not debt-free yet it's worth considering life insurance.
TPD insurance provides a lump sum payment if you suffer a serious illness or injury that leads to total and permanent disablement. In order for a claim to be paid, you will need to be unable to be likely to ever return to work again. It's often available as part of a life insurance policy.
Who needs TPD insurance?
Consider TPD if these are your priorities:
Owning a home
If you can't ever work again TPD can be used to take care of your mortgage.
Starting a family
TPD can assist with the costs of raising a family e.g. education in the absence of your income.
Safeguarding against unexpected health issues
TPD can pay for expenses where health insurance doesn't – for example, if you need home modifications.
Trauma insurance is designed to provide cover when you suffer from a serious illness or health condition. When you experienced a specified trauma event, for example heart attack, cancer or stroke, trauma insurance provides a lump sum benefit. This type of cover is sometimes also referred to as critical illness insurance.
Who needs trauma insurance?
Consider trauma insurance if you want to:
Deal with unexpected health issues
For example if you are diagnosed with cancer or a heart attack this can help with medical bills and life after treatment.
Income protection insurance pays an ongoing monthly benefit to replace your income when you are ill or injured and unable to work. Most policies will replace up to 75% of your regular income and may also offer cover for involuntary unemployment. You also have the freedom to choose:
The waiting period. This is the amount of time between when you suffer your illness or injury and when you start receiving benefits.
The benefit period. This is the maximum length of time for which your policy will pay an ongoing benefit.
Who needs to consider income protection?
Workers who rely on their income
If you are reliant on your income to pay the bills, including if you're self-employed or a high-income earner, then it's important to consider.
Homeowners or renters
Income protection can help you keep up with mortgage repayments or rent if you are out of work.
Ongoing family living costs
You'll be able to keep up with the costs of raising children – for example, school fees, food and sports classes.
Personal accident insurance, which is sometimes also referred to as accidental injury insurance, provides a lump sum payment when you are injured as a result of an accident. It covers injuries such as dislocations, fractures, severe burns and loss of sight or limbs, with different benefits payable depending on the type of injury. It's different from income protection insurance because it doesn't cover illnesses – only accidents.
Funeral insurance provides a lump sum payment to your loved ones or beneficiaries when you pass away. This benefit can be used to cover the cost of your funeral and meet any other immediate expenses that may arise. It’s generally very easy to apply for funeral insurance cover – there's usually no medical tests required and you are guaranteed acceptance if you're under 70 years of age. However, if you can afford life insurance, this is often a better value option.
You pay the same as buying directly from the life insurer. Better still, we regularly run exclusive deals that you won't find on any other site – plus, our tables make it easy to compare policies.
We're experts
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.
We're independent
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.
We're here to help
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 types
These are the 6 main types of life insurance you can get in Australia:
Life insurance
Income Protection Insurance.
Total and Permanent Disability (TPD) Insurance
Trauma Insurance
Personal accident insurance
Funeral insurance
A life insurance benefit payment can be used to:
Replace your lost income
Repay your mortgage and other debts
Help your family meet ongoing expenses
Pay for the cost of your funeral
Ensure that your loved ones can maintain their current standard of living should you pass away unexpectedly
Most will not provide any cover if your claim is a result of:
Suicide or intentional self-inflicted injury within the first 13 months of cover
Death caused by your involvement in illegal or criminal activity
Your involvement in a dangerous activity, for example an extreme sport
There's more than one way in which your life can change unexpectedly, so insurance products are designed to meet specific scenarios and needs.
For example, if you were in a car accident and became totally and permanently disabled, you would not be eligible for a death benefit from your life insurance policy. However, you could have significant medical bills, rehabilitation expenses and home modification costs – and all while you may no longer be able to earn an income. With both TPD insurance and term life insurance, you would receive the financial support you need.
Similarly, would you be able to keep paying the mortgage and providing for your family if you were forced to temporarily take some time off work due to injury or illness? Without income protection insurance in place, you and your family could end up in serious financial difficulty.
Yes, many insurers allow you to bundle different types of cover together. For example, term life insurance can be paired with TPD cover and trauma insurance, while if you're a sole trader or small business owner, you may want to consider adding business expenses insurance to your income protection cover.
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).
Life insurance can be bought directly from an insurer. Learn about the benefits and a few watch outs you should be aware of.
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