How do I find affordable term life insurance without compromising on cover?
Three quick steps to getting the cheapest 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 the cheapest quote.
- Avoid extras if you don't need them. For instance, drop the additional trauma cover if you only need basic life cover.
This article aims to provide you with the knowledge of what to look for in a policy, how to save money on life insurance and ultimately how to find the right cover, at the right price.
Compare low-cost options from these direct brands
finder.com.au's 12 most affordable life insurance policies
Here are the cheapest monthly premiums for brands available on our panel:
Below are the top 3 cheapest life insurance policies available on the finder.com.au quote engine for the age groups 35, 45, 55.
Cheapest premiums for a male (35 year old)
|Policy||Premium (per month)|
|MLC Life Insurance||$25.58 per month|
|AIA Priority Protection||$30.06 per month|
|Asteron Life Complete||$30.18 per month|
|AMP Elevate||$30.22 per month|
|TAL Accelerated Protection||$30.48 per month|
|Zurich Wealth Protection||$30.91 per month|
|OnePath OneCare||$32.00 per month|
|CommInsure Protection||$32.19 per month|
|ClearView LifeSolutions||$32.20 per month|
|Macquarie (Zurich) FutureWise||$32.51 per month|
|BT Protection Plans||$33.27 per month|
|AMP Flexible Lifetime Protection||$33.71 per month|
Cheapest premiums for a female (35 year old)
|MLC Life InsurancePolicy||Premium|
|MLC Life Insurance||$20.12 per month|
|AMP Elevate||$23.87 per month|
|TAL Accelerated Protection||$24.12 per month|
|AIA Priority Protection||$24.14 per month|
|Asteron Life Complete||$24.37 per month|
|OnePath OneCare||$24.93 per month|
|BT Protection Plans||$25.33 per month|
|ClearView LifeSolutions||$25.34 per month|
|CommInsure Protection||$25.56 per month|
|Zurich Wealth Protection||$25.57 per month|
|Macquarie (Zurich) FutureWise||$26.88 per month|
|AMP Flexible Lifetime Protection||$28.15 per month|
Note: quotes are based on a policy taken out in NSW for a sum of $500,000 for a non-smoker.
|Policy||Premium for males|
|MLC Life Insurance||$43.78|
|Asteron Life Complete||$48.98|
|ClearView Life Solutions||$51.25|
|Policy||Premium for females|
|Asteron Life Complete||$39.37|
|AIA Priority Protection||$40.21|
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 30 August 2016 and are subject to change.
Average cost of life insurance in Australia by age and gender
Let us save you the trouble of trawling through the staggering amount of advice for reducing life insurance costs that can be found online. If you follow these seven tips you will be well prepared to make an informed policy decision that gives you the best value for money without leaving you underinsured.
1. Quit smoking
If you are a smoker and you want to be eligible for cheaper health insurance, the best step is to quit. Smoking, which to some brands can be as little as 1 cigarette within 6 months, can raise premiums by up to 50%. It can also add expensive exemptions to life insurance.
2. Apply early in your life stage
It’s better to apply for coverage when you are younger. As you grow older, premiums increase as the risk of claim also increases. It is also generally true that younger people are healthier, which means there will be fewer conditions that can lead to higher premiums.
3. Understand and choose the appropriate premium type
Generally, there are 2 different premium structures available:
- Stepped premiums. These start off cheaper than level premiums but increase with age. This is good for those who may switch between brands or who need cover for a shorter term.
- Level premiums. These are more affordable long-term because they do not change with age. Level premiums are best for those who want to stick with a brand for an extended period of cover.
4. Get the right amount of cover for your needs
The easiest way to save money on a new policy is to know exactly what you need and buy accordingly. This will allow you to balance the payout, benefits and bundled extras with what you will need rather than adding unnecessary and costly extras. For example:
- If you are only after cover that protects your family if you pass away prematurely then you probably won't require income protection.
- On the other hand if you are after cover that protects you if you're unable to work due to illness or injury and if you pass away then you may want to consider bundling life insurance and income protection.
5. Compare policies
The high demand for quality life insurance means that there are plenty of companies to choose from and that there is healthy competition in the market. Because of this, it is best to compare the policies of multiple brands in order to find the best rates. If you compare policies, you may be able to find:
- A policy that offers extra benefits for the same price (e.g. included trauma benefit or child cover).
- Savings on similar policies (e.g. a lower price on one policy for the same amount insured).
- Extra value on a policy (e.g. free child cover).
6. Consider getting a policy through super
You may be able to take out a life cover policy through your super fund. Many super funds will have included cover that is paid using your super contributions. This is often a cheaper alternative to standalone life insurance but not as tailored.
7. Speak to an adviser
Purchasing a policy through a qualified insurance adviser is a sensible option to lower the costs of life insurance. An adviser can guide you through picking a policy and tailor a plan to your specific needs. This means that the plan will have everything you need while cutting down on unnecessary features or costs.
The cost of life insurance may seem like another burden on your already limited budget, but there is a way to cover yourself and protect your family with a term life policy. In fact, this type of insurance can end up being the cheapest option because:
- Larger benefit amounts are available. When you compare term life insurance you will often find that you can be covered for large benefit amounts, for a relatively low premium cost.
- Term insurance is easy to understand and compare. This means that you can make simple comparisons to easily choose the most affordable term life insurance coverage, and you also save yourself time.
- You only pay for what you use. Like your car or home insurance, you are covered for as long as you pay the premiums. When you stop paying your premiums, your cover ends. This means no portion of your term life insurance premium is going towards an investment account, which makes the premiums relatively cheaper.
- You can be covered only when you need to be. When you're young, you have a lot of financial obligations such as a new family. Term life insurance protects you and your family during this high risk period. As you get older, you can reduce your cover since your financial obligations shrink, like your mortgage.
- You can take out insurance for both partners. Since term life insurance is so affordable, you can take out a joint policy.
There are many advantages of term life insurance but it is essential to be aware of the disadvantages:
- Term life insurance has an expiry date. When you are reaching the end date of your policy and you find that you still need life insurance coverage, re-applying for a new policy may be expensive when you are older and your health is not in top shape when you first had your term life cover.
- Restrictions on policy payouts. If you live past the period set on your life insurance policy and no claim has been made, the premiums you paid won't be refunded. Also, if you change your mind about your life cover and would like to cancel the policy after the cooling-off period set by life insurers, you will not get the premiums you have paid refunded.
- Lack of extras. Cheaper policies, while having lower premiums, will generally not include extra cover options that come with more expensive policies. Many of these options are quite useful, therefore before you choose cover based on premium cost alone, have a good look at what you're missing out on with the cheaper policy.
Your main concern when initially taking out, or renewing, your life insurance policy is to make certain you retain adequate cover to match your needs. finder.com.au’s survey in 2013 shows that 65% of Australian families are greatly underinsured. This leads to many families suffering severe financial hardship when it could have been avoided if more care had been taken when determining the cover amount. Some practical things you can do to ensure your adequately covered are to:
- 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.
Additionally, keep an eye out for the following terms when choosing a policy:
|Terms to look for||What to be aware of|
|Some insurance policies will have reviewable premiums whereby the insurer is able to increase your monthly premium further into your coverage term. For this reason it may be wiser to choose the policy offering the lowest guaranteed premium.|
|While taking out cheap life insurance with your spouse or partner may reduce your monthly premiums, in most cases you will not receive the same amount of coverage. This can result in the other partner being left without any insurance if one dies.|
|It is crucial to ensure there is an adequate amount to support your dependents in the event of your death. If you are buying term life insurance at a lower rate there is a chance that you may not receive the best cover possible.|
Term life insurance can now be obtained through your super fund, and is a cheaper option compared to life insurance obtained outside of super. However, it is important to note that while life insurance through super is more affordable, it is not without its shortcomings. Some of the advantages and disadvantages of obtaining cheap term life insurance through your super fund include:
The term period is typically nominated at the time of your application, with the most popular time frames being five, ten, fifteen, twenty or thirty years. When deciding which duration of cover is right for you, it is important for you to consider both your current and future needs. Some factors you should take into account are:
- Your age. Consider where you would like to be in five, ten or twenty years. Think of the various life events such as buying your first home, getting married, or having a child or more children, and how they would effect your family's finances. These events all impact your cover needs differently.
- Your financial circumstances. If you are young and have just started your career, you may have limited financial resources. Since you have no financial dependents and you have only accumulated a small amount of debt, a short-term life cover may be appropriate. It is important to remember that your personal and financial circumstances change overtime and you should consider this when choosing an appropriate term.
- If you are married and have young children. When considering a period of cover for term life insurance, it is essential to determine the level of financial obligation your family have to meet in the event you were to pass away. This includes education expenses if you have young children.
- Your long-term debts. If you have bought your first home, it is very likely that you have a long-term commitment to meet your monthly mortgage repayments. Your term life coverage period should reflect the time required for you to pay-off your mortgage (as well as making sure that the amount insured is sufficient to cover the repayments).
Robert and his 20 Year term life policy
Robert applies for his term life insurance policy when he is 35 years old and working as a high school teacher in Sydney. His 31 year old wife Emma works as a part-time bookkeeper, which allows her to have flexible working hours so she can also take care of their two young children, aged six and four.
Robert nominates a 20 year term period when he applies for his policy to ensure that Emma could still afford to give their kids a full private school education in the event of his death. He and Emma had also recently bought a larger house to accommodate their growing family. Emma's income by itself would not be sufficient to cover mortgage repayments and keep on top of bills if Robert died prematurely.
By the time Robert's policy nears its expiry date, his children would be 26 and 24 years of age, hopefully living out of home and earning their own income. Having taken out a 25 year loan term on his mortgage, the family home will almost be fully paid off when his policy expires as well.
Joint life insurance policy
If you are looking to secure cheap life insurance cover, then you may want to include your spouse or partner on a joint policy. So what is a joint policy, and what do you need to be aware of when considering one:
- As the name suggests, joint life insurance is a policy owned by two individuals that usually have an interdependent relationship, such as married or de-facto couples or business partners.
- It is important to remember that even if your partner or spouse is a homemaker, that doesn’t mean that cheap life insurance is less important for them. Even if they contribute little or no income to the household, losing a homemaker can still cause significant financial hardship.
- Joint life insurance can provide valuable protection that both you and your partner can benefit from. In addition to peace of mind, you may also be eligible for a 5-10% discount on your premiums.
Some insurance providers may offer life insurance cover for your children for free or at an additional cost. This type of policy can:
- Provide financial relief for medical and hospital bills incurred if your child suffers a serious illness or injury.
- Provide a death benefit in the event that your child passes away.
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 best suited to:
- Those who know exactly what they are looking for in a policy.
- People who are looking for cover for specific or specialised needs, such as mortgage protection or insuring large business loans.
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. Not only do you get better access to cheap life insurance plans, but it is also:
- More efficient. You can compare multiple life insurance policies at once to secure the best deal to suit your needs and budget.
- Easier to get help and assistance. 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. Best of all, you can obtain this service free-of-charge and you are under no obligation to sign up right away if you need more time to make a decision.
- Your personal details are kept secure. Your personal information will be kept secure when you submit your request for an online quote. These details are necessary to enable direct providers and advisers to generate a preliminary quote and so that they are able to contact you to discuss your cover options.
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: