The best life insurance cover depends entirely on your personal circumstances. There are some key strategies you can use to find the policy that is most suitable for your needs:
- Understand your personal circumstances. Get a clear picture of how you stand financially so you can calculate a workable budget for your insurance premiums. Take stock of your medical history to assess what items you will need included in the policy.
- Compare policies. Be sure to compare premiums, benefits, and terms and conditions from a range of providers.
- Speak to an insurance adviser. An adviser can give you recommendations, break down complex language and tailor a plan to your specific requirements.
Best life insurance policies of 2016 as voted by the AFR
Below is a list of the top life insurance policies selected by the Australian Financial Review for its annual Blue Ribbon Awards. The criteria it considered included clear pricing and definitions, a wide range of features, flexibility and substantial benefit amounts.
Best term and Total and Permanent Disability Insurance (TPD)*
Listed below are the best term and TPD insurance policies of 2016. All these policies offer $5 million in TPD cover and unlimited life cover.
|Product name||Product details||Maximum Age to Apply|
|MLC Life Cover with TPD Rider –term/TPD Policy||Offers the widest range of features of policies compared, combined with clear pricing.||59|
|TAL Accelerated Protection – Life Insurance – Highly commendable||Life insurance cover can be bought back if a TPD claim is made.||62|
|Comminsure Life Care – Highly commendable||Offers a Plan Protection Option to keep your cover going if you become disabled.||69|
What features should I assess to find the best cover?
Everyone has different needs when it comes to providing adequate cover for themselves or their family in the event of unforeseen losses. The best policy is one that includes all your requirements, offers adequate flexibility and fits within your budget. Think carefully about the features you need, then compare the cost of different policies that include them:
|Feature||What does this mean?|
|Affordability||Make sure you will be able to comfortably budget for the policy both now and in the long term.|
|Worldwide cover||The policy will cover you if you visit other counties. It is especially important if you are a frequent traveller.|
|Sum insured||Policies differ in the minimum and maximum levels of cover they offer, and the amounts can be affected by various age or lifestyle factors.|
|Age limit||Every policy has an minimum and maximum age limit which determines when it can be purchased and when it will expire.|
|Ability to combine cover||Most brands offer extra security by allowing you to combine life insurance with TPD, trauma or income protection.|
|Additional cover options||Additional options can include needlestick benefits, benefit buy back or premium reimbursement.|
|Ability to adjust cover||Conditions can vary between brands regarding adjusting cover levels. In some instances you may be required to take another medical exam.|
|Premium payment options||This includes the ability to choose stepped (increase with age), level (remain the same) or hybrid (begin on stepped pattern before automatically converting to level) payment structures.|
|Built-in benefits||Policies differ in the way they offer built-in benefits, which can include indexation, terminal illness, funeral expenses, the ability to include children in the policy and financial planning.|
|Include your children in your policy||It is important to protect your family's future in case anything happens to you. Include your children to ensure they will be financially covered.|
|Discounts and rewards||Some providers offer discounts if you take out multiple policies, maintain your policy or sign up for health programs.|
Additional policy features to consider
|How premiums are adjusted according to your health||When you sign up for a life insurance plan you generally have to undergo a physical examination. The medical underwriter takes into account your age and medical history when calculating your premiums.|
|How pre-existing medical conditions are incorporated||If you are an older person or you have a known medical condition, you can still find affordable life insurance cover. Providers use different criteria to assess pre-existing conditions and determine what they will automatically cover.|
|If the policy covers specific occupation types||If you work in an occupation that carries higher than average risks, there may be exclusions in the cover you are considering. You may need to do additional research to find a suitable policy.|
|Additional fees||Most policies incur an annual fee. Insurers should provide full disclosure of any fees they apply.|
Tip: Review your policy regularly
If you already have cover in place, you should review your policy regularly to ensure you are not overinsured or underinsured. Events that can affect your policy include:
- Marriage or divorce
- Buying a new home
- Children moving out or becoming financially independent
- Changes in health
Most advisers recommend that you review your life insurance policy at least once every 12 months. There may be a better-priced and/or more suitable option available.
How do life insurance needs change over time?
The graph below shows different life stages and when it may be a good time to take out cover. This should only be used as a guide as requirements can change depending on your own situation.
How can I get the best* policy for the lowest price?
- Determine an appropriate level of cover: Consider your current financial obligations and how long you are likely to require cover to determine an adequate amount of insurance. You may find that a cheaper policy with less features is still sufficient for your situation.
- Review existing cover: You may already have some cover via your superannuation or your employer, or included in other insurance products. Assess what is already in place and see if you need to upgrade.
- Live a healthier lifestyle: Pre-existing medical conditions, smoking, alcohol consumption and obesity can all drive up your premiums; smokers usually pay double. Live a clean lifestyle and be rewarded with lower premiums.
- Speak with an insurance adviser: An adviser can use their knowledge of the market to help you find competitively priced cover.
- Consolidate existing cover: You may have some life insurance accumulated across different superannuation funds. Consolidating the cover can help you avoid multiple charges.
- Combine policies: Some insurers offer multi-policy discounts if you take out cover for your spouse or child, or if you take out other types of personal insurance with their company.
From start to finish: Steps to ensure you have the right cover
Extra value provided by life insurance brands
Australian insurance providers use different methods to attract and reward customers. Common discounts you can ask about when applying for life insurance include the following:
- A multi-policy discount: When you have more than one insurance policy with the same insurer, you often qualify for a multi-policy discount. For example, if you have home and car insurance with a particular insurer, ask if you qualify for a discount if you take out life insurance with them too. You could save around 5% on your premiums.
- Multiple life insurance policies: You can also take out more than one type of life insurance policy to qualify for a discount, for example, if you are a small to medium business owner you can purchase coverage for yourself, your family and your business. These additional insurances can also offer potential tax benefits and savings at tax time.
- Discount for a large sum: If you are insured for a large benefit amount, for example more than $1 million, you may be eligible for a discount on your premiums.
- Making annual payments: If you pay your premiums annually, rather than fortnightly or monthly, many insurers will offer you a discounted rate. In some cases you can save up to 8%, plus you have the ease and convenience of making just one payment, secure in the knowledge you are covered for the entire year.
- Health and lifestyle: A healthy lifestyle can also result in discounts. For example, if you can show proof of gym membership or evidence of health screening, you often qualify for a discount of around 10% on premiums.
A sample of what is offered
Following are examples of some of the benefits and discounts offered by three of Australia’s major life insurance providers.
- Counselling and grief support: When a claim is made on a life insurance policy, it follows a serious event such as death, serious injury or the diagnosis of a serious illness. AIA provides 24/7 counselling support for you and your family if such a situation arises.
- Legal and tax advice: Although the main aim of life insurance is to reduce financial pressure in the event of a death, there can still be a number of legal, taxation and financial decisions that will need to be made. AIA offers legal assistance for an injury, dispute or litigation which may arise.
- Home assistance: If you make a claim on your life insurance due to disability or illness, it's likely you are going to need more help with everyday tasks. AIA can provide in-home assistance with tasks such as household duties, gardening, child care or cleaning.
- Funeral planning: When a loved one has passed away, it can be difficult to think about the details of planning a funeral. AIA offers assistance choosing a funeral director, a cemetery or cremation service, and can plan a function and catering following the service.
- Complete worldwide coverage: This benefit means you and your family are covered for serious illness or injury anywhere in the world, 24 hours a day, seven days a week. You can also cover each of your children for a maximum benefit of $10,000 for illness or injury.
- Rewarding loyalty: As a loyal customer, Asteron will reward you by increasing your coverage amount without requiring you to undergo any further medical examinations.
- Advance funeral benefit: If you are faced with paying for a funeral, Asteron will pay an amount in advance of the full benefit to help cover immediate expenses.
- Financial planning reimbursement: If you or your family seek financial advice after receiving the full benefit amount, Asteron will reimburse you the cost of this advice.
- Comprehensive and extensive financial management: As well as life insurance policies and options, MLC also offers investment, superannuation and private wealth management solutions.
- Strength in numbers: MLC currently manages more than $122 billion on behalf of individuals and corporate customers in Australia.
- Access to the best doctors in the world: MLC can connect you with 50,000 of the best doctors around the world so that you can receive world class treatment and advice no matter what your condition.
Australian providers often offer children's insurance as a free extra when you take out a life insurance policy. Adding your children will generally cover them in the case of:
- a traumatic event, or
- a terminal illness.
The exact illnesses and injuries your child is covered for will differ between providers. However, you generally receive a tax-free benefit of between $10,000 and $25,000 on your child’s life insurance claim. Children aged between 2 and 16 can be covered under your policy, and can often convert to a full policy when they become an adult.
The benefit you can receive by having your child covered under your policy can assist you in the following ways:
- It can provide the financial flexibility for you to take time off work to care for your child.
- You can use it to pay for specialist treatments.
- It can cover everyday bills such as mortgage, school fees or child care for your other children.
- It will allow you to pay for home and car modifications to accommodate your child.
- You can keep your child comfortable and secure while they deal with a difficult time in their lives.
Pre-existing medical conditions
It is still possible to find affordable life insurance coverage if you have a pre-existing medical condition.
- Be clear about what you want from your life insurance: Do you simply want to provide a benefit payout when you pass away, or do you want to be covered for an ongoing medical condition?
- Include a letter from your doctor: Ask your doctor to write you a letter outlining your current medication and treatment.
- Don’t give up if you are rejected: Keep in mind that each insurer has its own criteria for assessment of risk.
- Tell the truth: Failure to disclose full details of any pre-existing conditions may lead to your policy being rejected in the event of a claim.
High-risk occupation cover
If you work in a high-risk industry you may find it difficult and/or expensive to find life insurance.
- Search widely. Make sure you compare a variety of different life insurance plans and providers, as each will have a different approach to high-risk applicants.
- Look for high-risk specialists. Some insurers are very experienced in this area and offer special deals for applicants with high-risk occupations.
- Be clear about any exclusions. If an insurer agrees to cover you as a high-risk applicant, they may still prevent you claiming for accidents or injuries that result from specific activities.
Review life insurance brands*
- Strength: Check the company's financial strength and credibility.
- Customer service: Read up on reviews from previous customers and industry bodies to get an idea of the insurer's level of customer service. Look for things such as how it handles claims, and how easy it is to get in contact with a representative.
Make sure you avoid these common pitfalls when looking for life insurance cover:
- Ignoring future costs: Think about your current bills and expenses and take into account what these will look like in the future. For example, if you have young children the cost of school and tertiary study is going to be significant in coming years, so make sure you allow for this when assessing what you can afford.
- Forgetting to cover the stay-at-home parent: Life insurance for a stay-at-home parent is also important. Consider points such as how much your family would have to spend on a cleaner and child care if the parent became ill, was injured or died.
- Putting off taking out cover: Your premiums will only increase with age so think about taking out cover early and securing a competitive rate.
- Going with the cheapest policy: The cheapest policy will usually offer a reduced level of cover. Make sure the premium matches the quality of the cover provided.
- Skim over the terms and conditions: Take time to read the product disclosure statement carefully so you have a clear understanding of exactly what you will be covered for and the conditions for a benefit payment.
* The offers compared on this page are chosen from a range of products finder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking financial advice and consider your personal financial circumstances when comparing products.