Life Insurance Rates

What Are Life Insurance Rates?

Also known as premiums, Life Insurance rates are the amount of money that is payable for your policy. This ensures your beneficiaries will receive a benefit payment of the sum-insured in the event of your death or if diagnosed with a terminal illness. Life insurance rates are paid on a periodic basis, usually monthly and sometimes half-yearly or annually. If you miss the payment of your premiums, your policy will lapse, and depending on whether or not you are able to meet that rate payment, your insurer may cancel the policy. Life insurance rates often differ between policies as they are based on your personal situation and how comprehensive your policy cover is.
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What Causes Life Insurance Rates to Differ Between Policies?

There are many factors that lead to variation in life insurance rates. In your application for a Life insurance policy, insurance providers will require you to disclose personal information about yourself in order to grasp an understanding of the probability of a benefit payout in the future. The level of risk you present will determine the Life Insurance rate you will need to pay. There are a number of risk indicators that an insurance provider will look at to determine the Life Insurance rates you pay for your policy, including:

  • Age: As you get older, the health-related risk you pose to insurers will be higher and your premiums will be significantly higher.
  • Gender: Your gender plays an important role for insurance providers to determine the level of premium you pay, because it is linked to your life expectancy. Research has shown that that women have longer life expectancy compared to men, resulting in lower premium payments for cover than men.
  • Occupation: An insured person with an occupation deemed ‘high-risk’ by the insurance provider will pay a higher premium than persons insured with a ‘standard’ occupation. Examples of high risk occupations include mining, construction or medical professions.
  • Lifestyle:
    • Smoking habits - smoking is linked to many health issues, such as heart disease and cancer. If you are a smoker expect to pay as much as double the premiums of a non-smoker, as you are considered to carry a higher level of risk.
    • Alcohol consumption - If you are a heavy drinker, then you will pay higher premiums than those who drink moderately. Underwriters will assess if alcohol consumption has had any visible impacts on your health.
    • Pastimes - Participation in high-risk hobbies such as extreme sports can result in a higher premium payment.
  • Family medical history and pre-existing medical conditions: If there are certain illnesses or conditions that are passed on through generations, an insurer will want to know about them. It may result in an increased premium payment as the insurer adjusts for the perceived risk, but non-disclosure of any relevant information will result in the termination of your contract.
  • Current health: When you apply for Life insurance, you may be asked to go through a medical exam. If you are deemed to be in good health, your insurance rates could be lower compared to someone with various health conditions.
  • Amount of coverage: Your rates will also depend on how much coverage you wish to take out.
  • Premium rates structure: Level Value and Stepped Value
    • Stepped: Stepped value premiums are influenced by age, which means the older you become, the higher your rates will be. Premium payments start off low, which makes it appealing to young policyholders.
    • Level: Level value premiums are fixed throughout the term you have settled on at the time of application. It may seem to be expensive at the beginning, especially to the younger generation, but it does not increase over time. The premiums will be much more affordable in your later years. Stepped premiums will usually exceed the level rates at some point, so you must decide which premium rates structure is most suitable for you.

Tips to Compare Life Insurance Rates and Get The Best* Value for Your Money

Finding the right level of life insurance is a tough job, but it is one that is of utmost importance. Being over-insured can put you in a potentially compromising financial situation, as the premiums you’d need to pay might exceed what you can afford. If you don’t pay enough however, you might not have enough coverage to provide your dependents with financial security in the event of a claim being made. Here are some tips to choose an appropriate level of cover for you:

Determine what sort of Life insurance you want to buy. Australian Life insurance providers offer four main types of Life insurance, each designed with the specific purpose to protect you and your family from unforeseen events. Research each of these and determine which ones are most relevant to you. Policy types include:

  • Term Life Insurance
  • Income protection
  • Total and permanent disability (TPD)
  • Trauma insurance

Determine how much coverage you will need to cover all the expenses in the event of your death. The greater the coverage amount, the higher the premium payable so it is important to determine the amount of cover that will be just enough to provide for your family in the event of your death. Expenses may include:

  • Outstanding Debts and loans
  • Children's education
  • Funeral expenses
  • Outstanding taxes

Make sure you clarify if are any exclusions or conditions in which the benefit will not be paid when you or your dependents attempt to claim.

Be aware of built-in features and extra benefits that are on offer for an additional cost. These may not be necessary for you situation but it is useful to know what is on offer if your situation changes. Refer to the Product Disclosure Statement for detailed information. Some common optional extras are:

  • Critical illness cover: the option to add critical illness coverage to your term life insurance, so that it not only covers death and terminal illness, but also a range of other illnesses and diseases and the costs associated with that.
  • Waiver of premium: During periods where you are unable to continue working due to illness or injury, your premium payments will be waived. This ensures that your insurance is not cancelled due to non-payment.
  • Business safeguard option: Benefits could be made available if the person insured is a key person in a business.

Compare multiple quotes from a wide range of Australian providers to find life insurance rates that suit your budget and needs. Life insurance products offered by each provider may differ in some way, so you should do your research and choose the right options suitable for you.

Receive Term Life Insurance Rates From Selected Australian Providers

Use this guide to formulate a plan when shopping for the right Life Insurance policy suitable for your needs, and your personal situation. You will be offered a range of Life Insurance rates, so note down what factors contribute to this range in price. Find the right plan to ensure a secure financial future for you and your dependents under situations of distress. Choose the options that you need and consider the options that you may want, but remember that you need to keep your Life Insurance rates affordable over the lifetime of your policy.

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Coverage is the amount of money that you will be paid in the event of a claim. An insurance consultant can help you determine an appropriate amount. Calculator
Provides a lump sum payment if you become totally and permanently disabled and are unable to return to work.
Provides a lump sum payment if you suffer a serious medical condition. Cover can be taken out for 40-60 medical conditions depending on the policy you choose.
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William Eve

Will is a personal finance writer for specialising in content on insurance. While he cannot give personal advice to clients, Will enjoys explaining the intricacies of different types of protective cover to help individuals and businesses find affordable cover that won't leave them underinsured.

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