Is life insurance worth it?

Life insurance can offer peace of mind that your finances will be protected if a serious life event strikes. Ultimately, the decision rests on your financial position and individual circumstances.

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For some people, getting life insurance ends up being one of the best decisions they ever make.

That's because life insurance is there to help when things go seriously awry. It can cover medical bills if you get sick and keep a roof over your head if you can't pay the mortgage.

It can also give you the financial freedom to focus on getting better after an injury and make sure your family is well looked after in the event of your death.

Yes, life insurance comes at a cost, but it might not be as pricey as you think. A healthy 40-year-old can easily get $200,000 cover for around $10 a month.

5 reasons life insurance is worth it

one

Peace of mind

Life insurance can give you peace of mind that you'll be able to afford the bills if you can no longer work due to illness or injury. That means you can focus on getting better, instead of worrying about falling into debt.

two

Protect your family.

If your family would struggle to get by without your income, life insurance can give them a financial safety net. It could cover your children's school fees, let them stay in the family home or even pay for life's everyday expenses.

three

Medical care.

Life insurance can pay for rehabilitation and private healthcare costs if you suffer a serious accident or critical illness. It can cover the cost of installing medical equipment in your home and ensure you get the best care possible.

four

Quality of life.

Life insurance can pay for home renovations if your mobility changes or for a carer so you can maintain independence. It can also pay out if you're diagnosed with a terminal illness, so you can spend the money making the most of the time you have left.

five

It's reliable.

Despite what you may have heard in the media, relatively few life insurance claims are denied. Studies from ASIC and APRA show that over 90% of all life insurance claims are paid by Australian insurers.

When is life insurance a good idea?

There are lots of different motivations for buying life insurance. Some of the main reasons are:

  • If your family relies on your income. If your family would face financial hardship without your salary, it's a good idea to get life insurance which protects your income or pays out a lump sum.
  • If you have little savings. Would you be able to cover your bills if you were out of work for a few months, or even years? If not, life insurance could save you some serious stress.
  • If you're self-employed. Workers compensation doesn't cover self-employed people so if you're injured or killed on the job, you won't receive a benefit. Life insurance is a great alternative.
Phil Thompson's headshot
Expert insight: Why it's important to consider life insurance

"If you have someone who is relying on your income, then life insurance is particularly important. And not just kids. This can include elderly parents or a partner. No one is ever really prepared for life's harsh surprises, but insurance can help soften the blow."

Phil Thompson
Director at Skye Wealth, a specialist life insurance advisory

Which life insurance is right for me?

Life insurance is an umbrella term which covers several different types of insurance. You can buy standalone policies or bundle them together for more comprehensive cover. The six main types of life insurance are:

Shield with tick life insurance icon

Life (death cover).

Pays a lump sum benefit to your family in the event of your death or to you if you are diagnosed with a terminal illness.

income protection

Income protection.

Pays a monthly benefit to you if you are unable to work due to illness or injury. It's designed to replace a portion of your regular income.

trauma insurance

Trauma insurance.

Pays a lump sum benefit if you're diagnosed with a specific medical condition, such as major head trauma, stroke or heart attack.

tpd

TPD insurance.

Pays a lump sum benefit if an injury or illness renders you totally and permanently disabled. May pay a partial benefit if you are partially disabled.

Tombstone icon

Funeral insurance.

Pays a lump sum benefit to your family so they can cover the cost of your funeral after your death.

Personal accident insurance

Accidental injury/death.

Sometimes called personal accident insurance, it provides a lump sum benefit if you are injured or killed accidentally. This does not include cover for illness.

When is life insurance not necessary?

Although life insurance is a worthwhile investment for lots of people, there are some situations in which it's just not necessary. We'd encourage you to think twice about life insurance if any of the following apply to you:

  • You have extensive savings or assets. If you've already accumulated enough wealth to live comfortably or have income streams that can protect your family after your death, there may not be a need for life insurance.
  • Your family does not rely on your income. If your partner earns enough to maintain your family's lifestyle, you may not need life insurance. Having a policy could still reduce stress for your partner, but it may not be considered essential.
  • Your children are financially independent. If your children have become self-sufficient adults, you may want to reconsider life insurance. Once your children reach a certain age and become financially independent, any benefits they receive are taxed.

Is life insurance worth it for a single person?

In some situations, yes. Remember, life insurance doesn't just pay out when you die, it can also pay out if you're seriously injured or fall critically ill. Single people can see lots of benefits from a life insurance payment, including:

  • Help covering the bills, like rent or your mortgage, while you're recovering
  • Money so you can retrain, if you're no longer able to do your usual job
  • Money to pay for private healthcare or home nursing
  • Money to pay for home renovations if your mobility is impacted
  • The cost of a funeral covered, so you receive your preferred burial or cremation

Are the benefits of life insurance worth the cost?

That depends entirely on your own personal circumstances. The cost of life insurance varies depending on lots of different factors, including your age, overall health and chosen coverage amount. That's why it's so important to get a quote, before you decide whether it's worth it.

If you have financial commitments, such as a mortgage, which you wouldn't be able to cover without your income, life insurance is a good idea. Particularly if you have children who are financially dependent or your partner relies on your income.

However, if you're a senior with poor health, your life insurance policy will be more expensive than that of a healthy young person. If your kids and partner are financially independent or you have investments that would provide income even after you could no longer work, you may decide the regular premiums just aren't worth it.

Of course, the decision is entirely up to you. Everyone's personal circumstances are different and we can't tell you what's right in your case.

Compare life insurance brands and get a personalised quote

1 - 7 of 14
Name Finder Score Funeral Benefit Optional TPD Cover Optional Trauma Cover Maximum Cover
Medibank Life Insurance image
Finder Award
Best Rated Brand
Finder score
Funeral Benefit
$15,000
Optional TPD Cover
$1.5 million
(maximum cover)
Optional Trauma Cover
Maximum Cover
$2.5 million
Get QuoteView details
Our verdict: Medibank offers a higher payout limit ($2.5 million) than 15 other providers. It also won Most Loved, Best Value and Legendary Service categories in the Finder 2024 customer

⭐ Current offer: Save 10% on your first year of Medibank Life Insurance when you apply by 3 March 2025. T&Cs apply.
ahm Life Insurance image
Finder score
Funeral Benefit
$15,000
Optional TPD Cover
$1 million
(maximum cover)
Optional Trauma Cover
Maximum Cover
$1.5 million
Get QuoteView details
Our verdict: ahm offers a simple application process. Be approved online or over the phone. No medical or blood tests needed to apply.

⭐ Current offer: Get 10% off your first year of ahm life insurance when you apply by 3 March 2025. T&Cs apply.
AAMI Life Insurance image
Finder score
Funeral Benefit
$10,000
Optional TPD Cover
Optional Trauma Cover
Maximum Cover
$1.5 million
Get QuoteView details
Our verdict: There’s flexibility with AAMI as you can add another adult to your cover, with a competitive limit of $1.5 million. Easy application process with no medical exams.

⭐ Current offer: Take out an AAMI Life Insurance policy and get a $100 eGift card after 4 months of cover. Offer ends 03/03/2025. T&Cs apply.
Suncorp Life Insurance image
Finder score
Funeral Benefit
$10,000
Optional TPD Cover
Optional Trauma Cover
Maximum Cover
$1.5 million
Get QuoteView details
Our verdict: Competitive maximum cover limit of $1.5 million. Suncorp lets you change your cover amount by up to $100,000 after a big life event, such as having a baby.

⭐ Current offer: Take out a Suncorp Life Insurance policy and get a $100 eGift card after 4 months of cover. Offer ends 03/03/2025. T&Cs apply.
Real Family Life Cover image
Finder score
Funeral Benefit
$10,000
Optional TPD Cover
$1 million
(maximum cover)
Optional Trauma Cover
Maximum Cover
$1 million
Get QuoteView details
Our verdict: The application is simple; it can be done with 1 phone call and there are no medical exams. But households with larger debts may need more than a $1 million payout.

⭐ Current offer: Get back 10% of the premiums you’ve paid after 1 year.
Zurich Ezicover Life Insurance image
Finder score
Funeral Benefit
$15,000
Optional TPD Cover
Optional Trauma Cover
Maximum Cover
$1.5 million
Get QuoteView details
Our verdict: Good if you want a cheap policy from a well-regarded insurer – its 98% claims acceptance rate is higher than any other provider on Finder. Zurich keeps things simple: unlike others, it doesn’t go in for optional add-ons such as TPD or trauma cover.

⭐ Current offer: Policy discounts include 10% off for your partner if you sign up for a joint policy. You can also get 5% off income protection if you buy it alongside your life cover.
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Finder Score - Life Insurance

Life Insurance is a little complicated and a lot overwhelming. That's why we made the Finder Score, to make it easier to compare Life Insurance products against each other. Our experts analysed over 30 products and gave each one a score between 1 and 10.

But a higher score doesn't always mean a product is better for you. Your situation is unique, so your policy choice will be too. Don't think of Finder Score as the final word, but as a good place to start your life insurance comparison.

Read full Finder Score methodology

Why compare life insurance with Finder?

  • You pay the same price as buying directly from the life insurer.

  • We're not owned by an insurer (unlike other comparison sites).

  • We've done 100+ hours of policy research to help you understand what you're comparing.

Frequently asked questions

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Senior writer

Nicola Middlemiss is a contributing writer at Finder, with a special interest in personal finance and insurance. Formerly a business and finance journalist, Nicola has written thousands of articles helping Australians better understand insurance and grow their personal wealth. She has contributed to a wide range of publications, including Domain, the Educator, Financy, Fundraising and Philanthropy, Insurance Business, MoneyMag, Mortgage Professional, Yahoo Finance, Your Investment Property, and Wealth Professional. Nicola has a Tier 1 General Insurance (General Advice) certification and a Bachelor's degree from the University of Leeds. See full bio

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Nicola has written 240 Finder guides across topics including:
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Editor

James Martin was the insurance editor at Finder. He has written on a range of insurance and finance topics for over 7 years. James often shares his insurance expertise as a media spokesperson and has appeared on Prime 7 News, WIN News, Insurance News, 7NEWS and The Guardian. He holds a Tier 1 General Insurance (General Advice) certification and a Tier 1 Generic Knowledge certification, both of which meet the requirements of ASIC Regulatory Guide 146 (RG146). See full bio

James's expertise
James has written 205 Finder guides across topics including:
  • Car, home, life, health, travel and pet insurance
  • Managing the cost of living
  • Money-saving tips

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