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Life insurance tips

Confused about your cover options? Here's 11 life insurance tips to help you make the right choice.

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We’re committed to our readers and editorial independence. We don’t compare all products in the market and may receive compensation when we refer you to our partners, but this does not influence our opinions or reviews. Learn more about Finder .

Life insurance is an important part of financial planning. However, with all the complexities of different policies, understanding all of the ins-and-outs can be difficult.

Here are 10 tips to help you make the right choice when looking for cover.

1. Purchase life insurance when you're young and healthy.

youngYou might be asking why insure yourself when you are young and healthy? Statistically, most insurance claims are paid to people between the age of 30 and 40.


level2. Go for level premiums if you're thinking about long term.

Choosing a premium structure, stepped or level, will depend on your financial situation. Stepped premiums are premiums that increase as you grow older. The advantage for this type of premium structure is that the initial premiums are much lower than level premiums. However, the premiums continue to increase each year until the end of the term.

Level premium remain the same until you reach the end of your term. This means that while your premiums start higher, by the end of the term, you're paying less than if you'd chosen stepped premiums.


3. Think about your income.

incomeHaving income protection can provide you with up to 75% of your monthly gross income if you are unable to work because of an illness or injury. The monthly stream of income you will receive will help ease your burden financially by providing for the daily needs of your family.


comprehensive4. Opt for a comprehensive cover.

You can protect yourself against a range of risks by taking out a comprehensive life insurance policy. A comprehensive policy can protect you in the event of

  • Disability
  • Critical illness
  • Death


5. Change your lifestyle.

lifestyle-runninggOne of the factors that could affect the cost of your premiums is your health and lifestyle. If you're a smoker, your monthly premiums will be more expensive because you're more prone to risks than non-smokers.

If your Body Mass Index (BMI) is low, so are your premiums. It's important to consider living a healthier lifestyle to minimise your insurance premiums.


review-policy6. Review your policy on a regular basis.

As you go through life your needs change. The policy that you took out when you were 30 years old and starting your family may not be right for the 55 year old you who is eyeing the not to distant possibility of retirement. By reviewing your cover you can make sure that the level of cover you have suits your current situation. If it's too much, see how much you could save by taking out a new policy with a lower level of cover.


7. Make annual payments.

annualPaying your premiums annually can save you up to 8%.


application8. Don’t be discouraged by the application process.

As a part of the underwriting process you will be asked to disclose some personal information such as your lifestyle, salary, and medical history. While you may not feel comfortable telling a stranger your personal business, it is necessary for them to know this information in order to create an accurate picture of the risk you pose. This risk will determine your premiums. And don't try to sneak anything by the insurer, if it comes out that you failed to disclose any pertinent details you run the risk of your policy being voided.


9. Assess future possibilities with your spouse.

Getting life insurance is a major decision that will have an impact on you and your spouse/partner. Take the time to sit down with your spouse/partner and talk about how each of you would financially cope if the other passed away. By assessing your finances together, you will have an idea how much life insurance you need. You have the option to apply for jointly owned life insurance policy, which will protect both of you in the event of death or terminal illness and you can also take advantage of possible discounts from insurance providers for this type of policy.


10. Choose trustworthy companies.

There are hundreds of insurance providers in the market. It's important to choose one with a proven track records, from reputation in the market (awards and reviews) to customer service to claims history.

11. Use an adviser if you need help

Here's why an adviser is worth considering:

'71% less likely' was calculated using figures from ASIC's Report 498: Life Insurance Claims: An Industry Review. The report states that the average declined claims in a non-advised policy is 12% in comparison to an advised policy at 7%. 12% (non-advised) is 1.71 times the amount of 7% (advised) hence a 71% less chance of an advised policy claim being declined.

Additional guides to help you choose

Before you buy: Comparing, applying and avoiding rip-offs

Currently own a policy? Cancelling, switching and planning for the future.

Life Insurance Cancellation

Life Insurance Cancellation

Are you thinking of cancelling your life insurance policy? There are a few things that you need to be aware of before surrendering an important protection cover for you and your loved ones.

Read more…

Pre-existing conditions and health: Health factors, disclosure and premiums.

Claims and payouts: Learn how to make a successful and fast claim.

Understand how life insurance works as you get older

Compare Life insurance quotes from these direct brands

Name Product Maximum Cover Maximum Entry Age Minimum Cover Terminal Illness Benefit
Real Family Life Cover
$1,000,000
64
$100,000
$1,000,000
Get a refund of 10% of the premiums you've paid (in the first 12 months) with The Real Reward™ .
NobleOak Life Insurance
$15,000,000
69
$50,000
$3,000,000
First month free for NobleOak Life Insurance. T&Cs apply.
ahm Life Insurance
$1,500,000
65
$100,000
$1,500,000
ahm Health members can save 10% off premiums.
Guardian Life Insurance
$1,500,000
64
$100,000
$1,500,000
Zurich Ezicover Life Insurance
$1,500,000
69
$50,000
$1,500,000
Get your first month free. T&Cs apply.
Medibank Life Insurance
$2,500,000
70
$100,000
$2,500,000
Medibank health members save 10% every year. T&Cs apply.
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