Which life insurance companies in Australia stand above the rest?
If you're at a life stage where you need life insurance, it makes plenty of sense to research which life insurance companies are the considered the best. But it's not the easiest thing to do. What exactly makes one life insurance company better than another? How many different companies do you need to look at? We've got you covered.
Our breakdown of top companies
According to the Australian Prudential Regulation Authority (APRA) there are 29 listed life insurance companies in Australia (as of 2 April 2019). That's a lot of companies.
To make life easier, we've broken it down into a few categories so you can easily see the companies that stand out. The categories we looked were:
- Market share. To give you an idea of who the majority of Australians are going with.
- Claims performance. Which companies have a strong claims reputation.
- Financial strength. Which companies are financially secure.
Top ten life insurance companies
By market share (2018)
Looking at a company's market share can give us an idea of who the rest of the market is choosing to insure their lives with.
Market share based on Total Risk Premium Inflows ending in Sept 2018 (Strategic Insight).
|OnePath Australia Group||10.00%|
|BT / Westpac Group||7.80%|
Tables are broken down by channel as the industry averages are different based on the channel. We assessed claims performance by:
- How often a claim is accepted
- The time it takes to accept or deny a claim
- The rate of disputes
Claims performance for retail policies
Life insurance companies have traditionally sold policies through an adviser. This is called retail cover.
|Insurer||Claims accepted rate||Average claim time (months)||Disputes per 100,000 lives insured|
|NobleOak (Friendly society)||N/A||N/A||N/A|
Claims performance for direct policies
Many life insurance companies now also sell policies directly themselves or through a brand e.g. TAL (company) sells it's cover through Virgin Life Insurance (brand). This is called direct life insurance.
|Insurer||Accepted claims rate||Average time it takes to accept or deny a claim (months)||Disputes rate (per 100,000 lives insured)|
|NobleOak (Friendly society)||N/A||N/A||N/A|
Claims performance for policies through super
Life insurance companies also offer policies which are obtained through a superfund. This is known as default cover.
|Insurer||Accepted claims rate||Average time it takes to accept or deny a claim (months)||Disputes rate (per 100,000 lives insured)|
We looked at claims data from The Australian Prudential Regulation Authority (APRA) during 2017-2018. The statistics above reflect 'death cover' claims.
By financial strength (2017) - Standard & Poors rating
Looking at a life insurance company's financial strength can help us determine how "creditworthy" it is. It can indicate whether a life insurance company can pay out claims today and in a few years down the road. Life Insurance companies in Australia have a good to very strong financial security rating.
|Ranking||Company||Standard and Poors Ratings|
|1||AMP Life Ltd.||AA-|
|2||National Mutual Life Association of Australasia Ltd. (The)||AA-|
|3||AIA Australia Ltd||A+|
|4||Colonial Mutual Life Assurance Society Ltd. (The)||A+|
|5||MetLife Insurance Ltd.||A+|
|6||OnePath Life Ltd.||A+|
|7||Westpac Life Insurance Services Ltd.||A+|
|8||Challenger Life Company Ltd.||A|
|9||Suncorp Life and Superannuation (Owner of Asteron Life Insurance).||A|
|10||Hallmark Life Insurance Co. Ltd.||BBB+|
Which life insurance brands have the highest customer satisfaction?
According to a study by Roy Morgan on the 13 largest insurers in Australia, the top three insurers were Insuranceline, Allianz and AIA Australia.
|Life insurance brand||2017||2016||Change|
Roy Morgan Single Source (Australia) December 7 2017
There's a difference between a life insurance brand and a company.
- Companies. These are the ones who create the policy and assess the risk of the applicant,
- Brands. This is who distributes and sell the policies to customers online or through advisers.
Note: A company can also be a brand, e.g. TAL also sells under it's own brand TAL.
Brands (If applicable)
|AIA Australia Limited||Bendigo Bank|
|Rest Industry Super|
|Allianz Australia Life Insurance Limited||HSBC Bank|
|AMP Life Limited||AXA (Now AMP)|
|ClearView Life Assurance Limited||Bupa|
|Colonial Mutual Life Assurance Society Limited (The)||Comminsure|
|Combined Life Insurance Company of Australia Ltd|
|General Reinsurance Life Australia Ltd|
|Hallmark Life Insurance Company Ltd.|
|Hannover Life Re of Australasia Ltd||Aussie|
|Doctors health Fund|
|H C F Life Insurance Company Pty Limited|
|MetLife Insurance Limited||ING DIRECT|
|Munich Reinsurance Company of Australasia Limited|
|OnePath Life Limited||ANZ|
|Pacific Life Re (Australia) Pty Limited|
|QBE Life (Australia) Limited|
|RGA Reinsurance Company of Australia Limited|
|SCOR Global Life Australia Pty Limited|
|St Andrew's Life Insurance Pty Ltd||Bank of Queensland|
|St. George Life Limited|
|Suncorp Life & Superannuation Limited||Asteron|
|Swiss Re Life & Health Australia Limited||Medibank|
|TAL Life Limited||AustralianSuper|
|The National Mutual Life Association of Australasia Limited||CGU|
|Westpac Life Insurance Services Limited||BT|
|Zurich Australia Limited|
After reviews for life insurers?
We list products from retail (advised) and direct brands.
Retail vs direct brands
- AIA - AIA Australia is a global life insurance company that has successfully combined its international presence with local expertise to offer some of Australia's most comprehensive and flexible life insurance policies. Products offered by AIA are constantly under review to ensure that the changing needs to Australians are always fully met in order to protect the things that matter to you the most.
- AMP - A trustworthy financial institution that has been helping Australians for over 160 years, the AMP Insurance team is committed to their customers and aim to process insurance claims quickly and efficiently. AMP’s products are reviewed on a regular basis to ensure that the insured person receives competitive cover.
- Asteron - Asteron is the company that wrote the first life insurance policy in Australia and also made the first pay out not long after. Today, Asteron Life is a part of the ASX listed Suncorp Group, and continues to be committed to helping customers get and stay healthy for life through the Asteron Life Wellbeing Program.
- BT - BT is the wealth management arm of Westpac Group. Customers have access to any of BT’s wealth services, including life insurance products from any Westpac or Westpac affiliated bank branch. BT is passionate about its customers and the wider community, involving itself in community organisations such as Clean Up Australia Day, Earth Hour and Australia’s Biggest Morning Tea.
- CommInsure - Comminsure is a part of the Commonwealth Bank Group and although the name “Comminsure” was only established in 1999, it’s roots can be traced back to 1873 with the foundation of Colonial Mutual Life Assurance Society. CommInsure prides itself on being one of the leading insurance providers in Australia with straightforward insurance solutions for its clients.
- Macquarie (Zurich) - Macquarie Bank has offered Life Insurance for customers since 1990, and despite being a young operation, it is supported by people with the experience and expertise to make the operation a success. Macquarie is now managed by Zurich Life Insurance.
- MLC - MLC Life Insurance is the asset and Wealth management arm of the National Australia Bank (NAB), offering multiple financial services such as superannuation, insurance and investment solutions to Australians since 1886 under its original name "The Citizens". MLC aims to continuously improve its customer service support with access to a diversity of investment managers from around the world.
- OnePath - Now owned by ANZ bank, OnePath was formerly known as ING Australia. OnePath has operations in over 32 countries and provides its products and services to more than 8 million customers. A passion to help people protect is evident from the numerous awards that has been received such as Money Management/DEXX&R.
- TAL - TAL is Australia’s Life insurance specialist, offering easy to understand, easy to get and easy to claim life insurance to 2.5 million customers in Australia. Owned by one of the worlds largest Life insurance companies, Japan’s Dai-ichi Life, TAL has won Life Insurer of the Year (Australian Banking and Finance Awards) for three years in a row, and numerous other awards.
- Zurich - Zurich Life Insurance is a Swiss company that has been providing life insurance products in more than 170 countries all over the world. Established in 1872 in Zurich, Switzerland, it acquired the Commonwealth General Assurance Company (CGA) in 1961 and has provided excellent service and solutions to Australians ever since.
- Guardian - Guardian Life insurance is owned by the Hollard Insurance Group of South Africa, with a presence in the Australian market since 1999.
- HCF - HCF, a popular name in the area of life insurance, is the largest non-for-profit health fund in Australia. Established 80 years ago as the Metropolitan Hospitals Contribution Fund, HCF continues to provide numerous benefits for its members.
- Metlife - Launched in Australia in 2005, it has rapidly established itself as a specialist provider of group and individual insurance solutions to business partners.
- NIB - Newcastle Industrial Benefits (NIB), is a fast growing Australian health fund that provides first class affordable health cover to over 900,000 customers around Australia.
- Q Super - A super fund for people working for the Queensland Government that offers insurance products through your superannuation package.
- Real Insurance - Real Insurance is part of The Hollard Group, one of the worlds leading insurers, and entered the Australian market in 2005.
- Suncorp - Suncorp Group is the largest general insurance group in Australia and the second largest in New Zealand. Suncorp Life offers specialised services in life insurance.
Six steps to comparing life insurance companies
1. Policies on offer
With so many life insurance companies competing for your business, it is essential to choose the company with the best range of products to meet your needs now and into the future. Consider your own situation and compare what products and prices they have on offer.
2. Reputation and position in the market
Don't be fooled by rogue life insurance companies with names that may suggest financial strength. Ensure they are a recognised financial institution with a listed address. Research the company history, company profile and find customer reviews to compare.
3. Financial strength
When you consider the length of time that you will be dealing with your provider you choose, it is essential to find a company that is financially stable. One way to check this is by checking the companies financial strength rating. The last thing you want is for your company to face bankruptcy a few years into your insurance term.
4. Customer service
Finding the right life insurance policy is often a daunting task for many individuals. There is much to understand in terms of finding a policy to match your lifestyle, income and family situation. Make sure that you find a company with a team of professional insurance advisers on hand to answer all of your questions from day one. A dedicated financial adviser goes a long way in helping you get suitable cover.
5. Claims process
Ensure you find an insurer that takes the time to help walk you though the claims process. Read up on customer reviews and look out for any complaints from previous customers on the insurer's performance in providing coverage.
6. Cost of cover
Don't be fooled by the fine print when comparing premiums from different providers. Often a policy that may appear cheap at first will have hidden charges that will result in a much greater final payment. Compare policies based on your age, the policy structure and features and the amount of coverage you are buying.
How do life insurance companies assess risk?
The financial soundness of all life insurance companies is built around risk management. The companies must be able to protect themselves against the amount of risk carried by providing customers with life insurance cover. In its simplest form a Life Insurance policy structure consists of:
- The insurer (the company itself): The seller of the cover.
- The insured (or policyholder): The buyer of the insurance.
- The insurance premium: The cost of Life Insurance cover, representing the risk involved to the company.
How do life insurance companies manage this risk
- Life Insurance agreement: The ensuing insurance agreement involves the insurer guaranteeing an amount of compensation to be paid to the beneficiaries of the insured, should the policyholder die.
- Periodical premium payments: In return, the policyholder will pay the insurer a sum of money (the premium) each month or annually throughout the agreed term.
- Substantial portfolio: The insurance company secures their risk by having a large number of policyholders, most of whom under normal circumstances might not die within the prescribed time.
Applicants can benefit from doing their own research into different providers. As long as you are not purely influenced by chasing the lowest possible premium, you can find out a lot by examining a life insurance company’s structure, its size, reviews and longevity in the market, the risks it is exposed to and ease of access.
It is up to you to make your decision but make sure you don't put your decision off unnecessarily as you never know what circumstances could be bestowed upon you.
How is your premium payment determined?
Life insurance premiums are calculated using a variety of factors, each associated with a probability of the person passing away and hence a claim being made. A life insurer collects as much information related to these factors as possible, resulting in medical exams, personal questions and investigations into genetic diseases being conducted during the underwriting process. Here are some of these factors that determine the life insurance rates that you will pay, should you choose to take out life cover:
- Age - As you get older, the health risks you face become significantly higher, hence resulting in a higher premium payment.
- Gender - Women generally pay lower premiums than men due to women having a longer life expectancy than men.
- Occupation - Insured people working in "High-risk’" occupations such as construction workers are required to pay a higher premium structure than people with "Standard" occupations such as office workers.
- Lifestyle - Smoking habits, alcohol consumption and participation in high-risk hobbies are all considered to be risky behaviour that results in a higher premium structure than the people who do not participate in these activities.
- Medical history and health - Certain medical conditions or diseases may increase the chance of a claim being made on the insured person, so people with existing or some exposure diseases or health conditions will be required to pay a higher premium.
How do life insurance companies make money?
The life insurance provider calculates what insurance premiums should be charged to account for the funds that could be claimed by customers as well as administrative costs of offering insurance products. The cost of providing insurance services is determined using mortality tables calculated by actuaries. Here are a few ways life insurance company minimise risks and become profitable:
- High number of policyholders - In order to make premiums more affordable, life insurance companies require a large number policy owners. This allows them spread out the cost of providing a life insurance service.
- Investment of premiums - Life insurance companies don't simply put the premiums you pay each month in the bank and wait to see if they have to pay out or not at some stage either. They invest the money they receive in high interest-bearing accounts, bonds and stocks. The vast amounts they have invested bring them huge returns, even when the stock market's not performing at its best.
- Extensive application process - Life insurance companies make a profit if the premiums collected (revenue) outweigh the number of death claim payouts (expenses). To reduce their risk, they generally require people to complete their details and personal circumstances in an application. When necessary, they also include medical and blood tests, before issuing a policy. Insurance companies want as much relevant information from you as possible.
- Detailed underwriting process - Life insurance companies undertake a comprehensive underwriting process to cut back their risks. This will ensure that each applicant pays an appropriate premium for the amount of cover they want over the period they want the cover for. As the applicants get older and the risk of dying increases while the coverage is still enforced, the cost of the same amount of cover grows proportionally.
- History - Some Life Insurance companies have been around for hundreds of years. They have had tens of thousands of policyholders and they know what type of applicants who are more likely to claim death coverage, and what premium rates they need to charge policyholders to be profitable. They can also share information with a group of insurance companies for a more accurate measure of risk.
Key duties and responsibilities of life insurance companies in Australia
No matter what type of insurance plan or coverage you are have bought or are planning to buy from an insurance provider, the duties and responsibilities that the provider has to adhere to remain the same. This is because these duties do not relate to a specific type of product or service but to the insurance industry as a whole. There are a number of core duties and responsibilities that insurance firms have, which are as follows:
- To not discriminate against potential and existing customers: Insurance companies do have the right to refuse coverage or even cancel existing coverage based on a range of factors. This could include anything from refusing coverage based on the risk that a potential customer poses to cancelling coverage due to false information or non-payment of premiums. However, what the insurance provider cannot do is to refuse cover or cancel existing coverage based on things such as the person's race, sexual orientation, marital status, religion or disabilities. Insurance firms also cannot make changes to the terms and benefits of an insurance policy based on these factors
- Be fair and honest: When it comes to their business practices, insurance providers have to act with fairness and honesty, which means that using deceptive and unfair processes in order to stay a step ahead of the competition or to try and tempt new customers on board is out of the questions. Some of the practices that would be classed as unfair and which insurance firms can therefore not use include making false statements, misinterpreting insurance policies intentionally, impersonating clients, and taking part in bidding wars
- Make payments on claims: The whole reason for consumers taking out insurance cover and paying premiums is so that they will receive a payout in the event of certain situations and circumstances that lead them to make a claim. Of course, the claim does need to be a valid and honest one and as long as it is, the insurance provider has a duty to pay out on the claim as per the terms of the policy and should do so in an efficient and timely manner
- Legal handling of premium payments: For as long as the insurance firm is receiving premium payments from the customer, it must ensure that it handles these payments legally and continue to provide coverage to the consumer. Any excess premiums cannot be kept by the insurance firm and must be returned to the consumer within a reasonable amount of time
- Efficient claims handling: Insurance providers need to ensure that all claims are handled efficiently and in line with their specified terms. Full payment should be made promptly in the event of a valid claim. In cases where the insurance firm is refusing to make a payout a full, honest and valid reason for the rejection of the claim must be provided. Providers cannot attempt to blackmail clients that make claims such as threatening to cancel their coverage if they refuse an offer of settlement. They are also not allowed to harass or hassle clients over any insurance claim that they are making
Who regulates the major life insurance companies Australia?
Companies that offers life insurance are financial services companies and are required to abide by the laws and regulations regarding the financial sector. These companies are regulated by the Australian Prudential Regulation Authority (APRA) to ensure that financial promises made by institutions are met within a stable, efficient and competitive financial system. APRA plays a critical role in protecting consumers and the financial well-being of the Australian community. The greatest concern of APRA is to ensure that life insurance companies are in a financially stable position to pay out possible claims made by customers, and that the insurance company will not go bankrupt.
Key precautions that APRA requires life insurance companies to adhere to:
- APRA requires each Life Insurance Company to publish a Risk Management Strategy (RMS) that describes the approaches and processes for managing the risks that an insurer faces.
- Risk identification and assessment - ensures that the life insurance company understands what risks it faces, and how they are controlling the risks faced.
- Risk mitigation and control - not only do life insurance companies need to understand what risks they face, they need to make sure they have controls and mechanisms in place to deal with the risks.
Can an insurer cancel my policy?
As oppose to insurance products offered from general insurance providers, ie Personal Sickness and Accident Insurance, life insurance and income protection from Australian life insurance companies cannot be cancelled at any time. Many general insurance policies are cancelled after a claim has been made where life companies will continue to allow for future claims to be made for income cover plans. An insurance company can only cancel a life policy if:
- The insured fails to enter into the contract in an honest and fair manner. This is regulated under the Insurance Contract Act of 1984 whereby both the insurer and the insured must be open and honest with each other about the risk that is to be insured.
- Does not comply with the duty of disclosure.
- Makes a misrepresentation during the initial policy negotiation before the contract was actually entered into.
- Does not act within the policy provisions, including the payment of the actual premium.
- Makes a false claim.
It is the responsibility of the life insurance company to inform the policy owner 14 days prior to the policy renewal date that their policy is up for renewal. The insurer is to inform the policy owner if they are prepared to renew the policy and any new terms that may be applicable. Failure to do will mean that policy is automatically renewed under the same conditions already in place.