Life Stages and Life Insurance

Not sure whether you need life insurance? Find out how your needs change at various life stages.

As you get older your priorities change. While one financial product may be extremely important to someone entering retirement age, it may not be relevant to someone just starting out in their career. Understanding your financial needs at these various life stages is imperative to your financial security.

At each stage of your life your insurance needs vary, which is why it's important to find the appropriate level of cover with the help of an expert.

Which stage are you at?

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Coverage is the amount of money that you will be paid in the event of a claim. An insurance consultant can help you determine an appropriate amount. Calculator
Provides a lump sum payment if you become totally and permanently disabled and are unable to return to work.
Provides a lump sum payment if you suffer a serious medical condition. Cover can be taken out for 40-60 medical conditions depending on the policy you choose.
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Rates last updated December 4th, 2016
Product details Maximum cover Maximum Entry Age Cooling-off
(days)
Life Insurance
Life Insurance
Choice of cover options and flexible premiums to suit budget. No lock-in contracts and fast application. $1,500,000 65 30 Get quoteMore info
Term Life Insurance
Term Life Insurance
Receive up to $1,500,000 in life cover with American Express Term Life Insurance issues by Zurich. $1,000,000 69 30 Get quoteMore info
NobleOak Term Life Insurance
NobleOak Term Life Insurance
Save 25% on NobleOak life insurance and pay no premium in the first month. $15,000,000 69 30 Get quoteMore info
Ezicover Life Insurance
Ezicover Life Insurance
Get up to $1.5 million in life cover. 10% discount available on a second life insurance policy when two policies are issued at the same time. $1,500,000 69 30 Get quoteMore info

Life insurance and early adulthood (18-30)

In these formative years, many young people are just finding their feet and beginning to realise just what financial independence means. Most don’t have financial dependants. While they may still be living with their parents, many young Australians own a car or have a credit card.But what if that car was bought on a finance plan or that credit card was used to finance a trip to Europe and you were suddenly unable to pay those bills? What would happen if an illness or injury meant that you were no longer able to keep up with those payments?One of the major benefits of taking out insurance during your early adulthood is that your premiums are drastically cheaper. The reason that premiums are generally cheaper is that younger people present less of a risk to insurer because of both their health and the amount of time that these people will be holding their policies.Reasons why you should consider cover include:
  • Paying your rent in the event you are no longer able to work
  • Making sure your household bills are paid
  • Keeping up your normal lifestyle
  • The continuation of your savings goals
  • Paying for any education costs
  • Securing your financial independence

Cover worth considering

Income protection insurance

  • Income protection insurance is a good idea for people in this life stage to consider. Income protection provides a revenue stream of 75% of your current wage and can help in situations where you are no longer able to work due to sickness or injury. Additional benefits may be provided to cover costs associated with rehabilitation.

Personal accident

  • Personal accident insurance is normally a little cheaper than income protection insurance but it only protects policyholders from injuries that are the result of an accident, not illnesses. Cover is usually provided as a lump-sum benefit and may vary depending on the nature of the accident and injury suffered.

Term life insurance

  • While term life insurance may not be critical for everyone in this age bracket, it may still be worth considering. The younger you take out life insurance, the lower your premiums will be in the long run as the likelihood of you having a pre-existing medical conditions is significantly lower than an older applicant. Term life insurance is definitely worth considering for young parents and first home buyers of this age group.

Superannuation

  • Getting started on your superannuation early is the most effective way of making sure that your financial future is secure. It is important to try and keep all of your super in one place, as having multiple accounts only hinders your retirement planning. It is never too early to start thinking about your super. One of the other benefits of superannuation is that many funds have built in cover for life and TPD insurance. For those who don’t feel the need to take out a comprehensive policy at this life stage, this is one possible option.

Total and permanent disability (TPD) insurance

  • Total and permanent disability (TPD) insurance provides a lump sum payment should the policyholder no longer be able to work because of a disablement. This benefit payment can help to cover ongoing medical treatments, support your family or cover mortgage repayments. TPD is separated into two policy types any occupation and own occupation. Any occupation is the cheaper of the two policies to take out but it is the hardest to make a claim for as you will need to prove that you are no longer able to work in any profession rather than just your current profession. TPD is one of the most popular types of cover for this age group, particularly TPD for those engaged in physical labour. Can be taken out as standalone cover or bundled on to life insurance policy.

Importance of having life insurance in adulthood (30-55)

This is the time in most peoples live that are filled with those life milestones like marriage, buying your first home and having children. While these are all memorable events, they can also bring their share of financial baggage.

Reasons why people in this life stage should consider cover include:

  • paying off the mortgage
  • continuing finance payments on a new car
  • paying off household bills
  • continuation of and investments
  • maintaining their family’s current lifestyle
  • funeral expenses

Cover Worth Considering

This group can benefit from taking out the same covers as listed above for those in early adulthood but there are other cover options that they may want to consider in addition to income protection, personal accident and term life insurance (which is especially important to those in this life stage).

Trauma Insurance

  • Trauma Insurance provides a lump sum payment to the policyholder should they suffer one of the trauma conditions defined by the insurance provider. Trauma insurance benefits are made in a lump sum payment when an insured event happens and is designed to help the policyholder and their family cover things like household bills and medical costs associated with conditions such as Alzheimers Disease, Coronary Bypass Surgery and Terminal Illnesses. For a more comprehensive of the conditions covered, have a look at the Trauma Insurance page.

Total and Permanent Disability (TPD) Insurance

  • Trauma Insurance provides a lump sum payment to the policyholder should they suffer one of the trauma conditions defined by the insurance provider. Trauma insurance benefits are made in a lump sum payment when an insured event happens and is designed to help the policyholder and their family cover things like household bills and medical costs associated with conditions such as Alzheimers Disease, Coronary Bypass Surgery and Terminal Illnesses. For a more comprehensive of the conditions covered, have a look at the Trauma Insurance page.

Total and Permanent Disability (TPD) Insurance

  • Total and permanent disability (TPD) insurance becomes more important in this life stage as people generally have more financial commitments.

Mortgage Insurance

  • Mortgage protection insurance a simplified form of life insurance designed purely for covering mortgage payments in the event of death, illness, injury or involuntary unemployment.

Life insurance for pre-retirement (55-65)

At this time in most people’s lives, their careers are beginning to wind down, their children have left the nest and their mortgages are that much closer to being paid off. While this segment of the population is gearing up for retirement, they still have financial obligations that need to be met.

Since people who are in this life stage are preparing for 20 plus years retirement, it is important to make sure that your finances are in order. Reasons why people in this life stage may consider cover include:

  • protecting their assets
  • eliminating their debt
  • preparing for any health issues
  • helping their children with their finances
  • planning for their retirement
  • creating wills and trusts.

Cover Worth Considering

Most insurance needs are cumulative, which is why there are always options to bundle policies together. By this life stage, many people will already have some combination of the cover options listed for the previous life stages. Whether it be a comprehensive life insurance policy that covers trauma and TPD or the insurance provided through your super, you will most likely have some form of protection in place.

Term Life Insurance

  • At this time in your life, your situation has changed, you may no longer have financial dependants and your mortgage may be considerably lower. In the pre retirement stage of your life, it is important to reassess the amount you are paying for your insurance. You should contact your life insurance provider and look at your options in regards to reducing the amount of cover you have or switch to a more affordable and simplified policy that still offers adequate cover.

Funeral Insurance

  • Funeral insurance can be a simple option for those looking to cover the final expenses that may arise in the event of their death. Cover is usually available to a maximum of $30,000 and can be used to cover any small debt, legal expenses and funeral costs.

Life insurance and retirement (65+)

This is the life stage that people spend their entire lives building to. This is hopefully a time of reduced financial obligations. Many people in this life stage have a large chunk of their mortgage paid and hopefully have a healthy balance in their superannuation. After years balancing the costs associated with their children, trying to reduce their debt and put money away for retirement, they have made it.

However, their need for financial protection is still very real. Health and insurance is important because of the increased risk of illness and injury that comes with age.

Reasons why people in this life stage may consider cover include:

  • Maintaining cashflow
  • Budgeting
  • Debt reduction
  • Paying off the last of their mortgage
  • Cost of living
  • Maintaining savings for retirement
  • Travel expenses
  • Maintaining lifestyle
  • Inheritance tax mitigation
  • Aged care planning
  • Estate planning

Cover Worth Considering

Term Life Insurance

  • At this life stage, most insurances that you have purchased over the year can be dialed back. Just like with pre-retirement, life insurance can be renegotiated in order to reduce premiums and provide a more suitable level of cover.

Estate Planning

Estate planning allows you to nominate what happens to your possessions once you’re gone. It also allows you to nominate what should happen in specific events and circumstances.

Other Cover

Many of the cover options listed previously are only able to be taken out prior to 65 years of age. If you already have one of these cover options in place, while you may not have the same level as cover prior to your 65th birthday you may wish to continue the cover depending on your current financial situation and needs.


Graph: How your life insurance needs change at each stage

Life Insurance States Graph

How much will life insurance cost at each life stages?

The average cost of life insurance varies with your age. This is due to a variety of factors based on your age including your life expectancy and the length of your cover.

AgeAverage premium per month (Male)Average premium per month (Female)
18$52.01 $30.27
25$36.26 $25.32
35$31.11 $24.87
45$53.37 $41.79
55$175.35 $121.46

Premiums are based on a non-smoker for a sum insured of $500,000.  Quotes are from finder's quote engine and are subject to change at any time.

What is my life expectancy at each life stage?

The average life expectancy varies with age.

AgeLife expectancy (Male)Life expectancy (Females)
1884.388.1
2581.685.3
358285.5
4582.585.8
5583.486.4

Source: World Health Organisation (WHO) 2016.


Life insurance needs are also affected by your dependants

Life insurance for single people

As a young, single person you may think that it’s unnecessary to purchase life insurance, but this isn’t the case. Life insurance can offer you and your family financial security and be bundled to provide income protection or critical illness insurance. If you have debts from university or personal loans, life insurance can allow your family to pay them off if something happens to you.

Life insurance is at its least expensive when you’re young and healthy and if you purchase a plan early you can reap the benefits of cheaper overall premiums. If you find a brand that you like, you can start with a cheaper plan and add in coverage as you grow older and build your family.

Just remember, you don’t have to buy the most expensive policy from the start. Talk to an adviser and pick a plan that suits your personal needs and can grow as your needs change.

Life insurance for couples

Similar to life insurance if you are single, getting married or having a partner increases the need for quality life insurance. In the event of death, life insurance can provide your partner with the ability to pay for expenses and keep the household in order. As a young couple, you will have similar accessibility to that of a young, single person, meaning you are generally eligible for lower premiums.

Life insurance is important for couples because there are usually more monthly expenses in the form of:

  • Mortgage
  • Car payments
  • Medical bills
  • Debt and loan payments

In the event of a life insurance claim, the lump sum payment can be used to pay off these debts or provide a monthly income.

As mentioned with insurance for single people, avoid risks associated with purchasing insurance by buying only the coverage you need and by shopping around to find the best price to fit your budget.

Life insurance if you have kids

Life insurance becomes increasingly important when you have children. In the event of death, the financial responsibility of raising a family may fall onto the single income of your spouse. Having a life insurance policy also adds the ability to bundle trauma insurance or income protection into your policy so that you can receive a lump sum payment in the event of a critical injury or monthly instalments if you cannot work.

On top of other financial responsibilities for couples, having children can multiply your expenses.

  • The average cost of raising a child is $488 per month. This is a number that is consistent across income and age brackets.
  • Over the course of raising a child from age 0 to 24, the total comes to around $610,000. These numbers can fluctuate and even multiply if you have more than 1 child.
  • Childcare, school tuition and college savings. These are other associated expenses that can fluctuate month-to-month.

When you are evaluating a life insurance policy make sure to have a payout sum that is large enough to give your family the financial support they need. You can calculate this by looking at the living standard you want your family to sustain and the current and future costs of raising your kids.

Life insurance if you're an empty nester

It is still important to have life insurance as an empty nester. As you grow older and prepare for retirement, life insurance offers added financial security for your spouse in the form of a lump sum or income protection if you pass away. Life insurance policies often have financial adviser benefits which will help your partner find the best way to use the claim payout.

As this is another stage in your life, it is important to reevaluate the coverage you need and tailor the plan accordingly. Some of the policy options you had when raising children may no longer be necessary and can be cut to save on monthly premiums.

Note: Premiums will increase as you get older and if you develop a medical condition. Also, many life insurance policies are cancelled at ages 70-75, so check with your insurer for specific restrictions.

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