How do I find affordable term life insurance without compromising on cover?
Three quick steps to getting cheap 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 a cheaper quote.
- Avoid extras if you don't need them. For instance, drop the additional trauma cover if you only need basic life cover.
What's on this page?
Find low-cost options directly from these insurance brands:
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.
Cast study: $500,000 in life insurance cover for a 35 year old.
|Life Insurance Policy ($500,000 sum insured)||Monthly premium (Male)||Monthly premium (Female)||Rewards program|
|AIA Priority Protection||$21.57||$16.07||AIA Vitality|
|TAL Accelerated Protection||$23.48||$17.12||TAL Health Sense|
|MLC Insurance||$25.58||$20.12||MLC On Track|
|Clearview LifeSolutions||$25.77||$18.69||Health Maintenance Reward|
|Asteron Life Complete||$27.03||$22.15||Asteron Healthy Life Option (up to age 29 on Stepped Premiums)|
|Zurich Wealth Protection||$30.11||$24.42||N/A|
|BT Protection Plans||$33.53||$25.59||N/A|
*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 1 September 2018 and are subject to change.
Does 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?
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. Consider applying early in your life stages
In some cases it can be cheaper 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.
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 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' and 'Cheapest' 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.