How do I find affordable life insurance without compromising on quality?
Follow these steps
It's possible to get life insurance at a cheaper rate without skimping on the quality as long as you:
- 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 two 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.
Two of the cheapest life insurance policies available in Australia
Based on quotes taken out through insurer websites and using our quote engine. These two policies were picked from a comparison of 19 policies. Prices may vary based on your age. Last checked May 2019.
Find cheap life insurance
Although price depends on circumstances, in our case study 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.
Case study: $500,000 in life insurance cover for a 35 year old.
|Rank||Life Insurance Policy ($500,000 sum insured)||Monthly premium (Male)||Rewards program||Do you need an adviser to purchase this cover?|
|4||$25.58||MLC On Track||Yes|
|5||$25.77||Health Maintenance Reward||Yes|
|6||$26.52||AMP Healthy Start||Yes|
|7||$26.94||Asteron Healthy Life Option (up to age 29 on Stepped Premiums)||Yes|
|8||$28.14||TAL Health Sense||Yes|
|10||$30.11||SmartValue Discount (When you combine cover with income protection)||Yes|
|12||$35.28||Earn Qantas Frequent Flyer Points||No|
|14||$35.88||First month waived||No|
|15||$41.32||Earn Qantas Frequent Flyer Points||No|
Medibank Life Insurance (non-member)
|$44.34||Discount's for Medibank Health Fund Members||No|
|Rank||Life Insurance Policy ($500,000 sum insured)||Monthly premium (Female)||Rewards program||Do you need an adviser to purchase this cover?|
|3||$18.69||Health Maintenance Reward||Yes|
|5||$20.12||MLC On Track||Yes|
|6||$21.28||AMP Healthy Start||Yes|
|7||$22.08||Asteron Healthy Life Option (up to age 29 on Stepped Premiums)||Yes|
|8||$22.56||TAL Health Sense||Yes|
|10||$24.42||SmartValue Discount (When you combine cover with income protection)||Yes|
|12||$26.65||Earn Qantas Frequent Flyer Points||No|
|14||$28.40||First month waived||No|
|15||$30.74||Earn Qantas Frequent Flyer Points||No|
Medibank Life Insurance (non-member)
|$33.44||Discount's for Medibank Health Fund Members||No|
*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.
Does the price for each brand change with your age? Yes it does
For a more accurate quote, compare quotes online.
What's covered in this article?
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:
Some brands let you earn frequent flyer points from what you spend on premiums
2. Look for a brand that integrates frequent flyer programs
Some brands let you earn frequent flyer points from what you spend on premiums. Some policies even offers 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 one point for every $1 in premiums you pay 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 them over time. This might take the form of a premium discount or an increase in the benefit paid and typical examples include:
- CommInsure Loyalty Bonus. If you've been with CommInsure for five 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 premiums you've paid on your life insurance.
4. Take out more than one type of cover
Many policyholder take out life insurance and then add another policy e.g. income protection. A multi-policy discount can sometimes apply when you are are covered by multiple policies. Examples include:
- Zurich Multi-Cover Bonus. A straight-up premium discount of 5% off each relevant policy.
- 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 one 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 insure. 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 premiums 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 premiums are 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 higher cover discounts. These are discounts on your premiums if you select a higher benefit amount. Typical examples include:
- Virgin Life Insurance. Get a 25% discount off your premium when you purchase more than $500,000 in cover.
- Insuranceline Life Insurance. Get a 15% discount off your premium when you purchase cover for an amount over $400,000.
- Woolworths Life Insurance. Become a Woolworths Rewards member and save 10% on your premium for up to $1.5 million in life cover.
There many factors that go into determining your life insurance premiums including:
- Your age. The earlier you apply for cover, generally the cheaper your premiums.
- Your gender. Whether you’re a man or a woman will affect your life insurance premiums 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 chose to insure yourself also plays a major role, ie 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 post 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 a 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 less risks.
- How you pay your premiums. You can generally choose to pay your premiums in one of three ways:
- Stepped. Your premiums start out lower but increase as you get older.
- Level. You pay the same price for the term of the policy.
- Hybrid. Your premiums increase to a point and then plateau.
- Combining cover. If you take out a 'joint policy' you can often get a discount on your premiums. Some policies may cover your children for free.
How much your life insurance costs also depends on the type of life insurance you take out and there are three options: direct, retail and group.
Retail policies are life insurance policies that you’d buy after seeking financial advice from a life insurance broker or adviser.
|Choose the amount you’re covered for||Underwriting process (but this mean's 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.
|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.
|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|
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 of health conditions
Another mistake people make is purchasing life insurance directly without a medical questionnaire. While this is quick and can sometimes save your cash on premiums, this policy will automatically exclude any pre-existing medical conditions. You won't know this until claim time.
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|
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.
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.
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.
If you are looking for cheap life insurance it is important that you make careful comparisons and understand exactly what you’re getting from your coverage, because while you may be budget conscious, you don’t want that to come at the price of having inadequate cover. Therefore, following are the answers to all of your questions:
* 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.
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