You could spend as little as $2.93 per week.
We looked at three different age groups (30, 40 and 50) for people looking for cover amounts of $250,000 and $500,000. Heres what we found:
- As little as $2.93 per week. That's how much it costs to get life insurance for 30 year old male.
- It's cheaper for females. Using the same details, a 40 year old female costs $2.76 per week vs $3.39 for a male (500,000 in cover)
- Less than two cups of coffee. If you're 30, it can cost less than two cups of coffee per week ($3 per coffee)
- Prices will change with personal circumstances. The cost depends on a variety of different factors including your age, smoking status and how much cover you obtain.
The table below shows the weekly cost of life insurance for 30 year old male and female applicants.
|Cover Amount||Male per week||Female per week|
|30 year old|
|40 year old|
|50 year old|
Prices shown in table are an average taken from the finder.com.au quote engine and are for non-smoking office worker. These prices should only be taken as a rough guide. Rates last checked on September 2017.
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There are several factors which insurers consider when determining how much you will pay for life insurance. These include:
- Age. The older you get, the greater the risk you become to the insurer and the more you will pay for your life insurance. For this reason, many people opt for level premiums (remain the same for the life of the policy) rather than stepped premiums (which start low and get higher as you age)
- Gender. Males and females are assessed differently by insurers, with females generally seen as lower risk than males.
- Smoking status. If you are a smoker, you are seen as high risk and will pay more for your premiums. The only way to alter this and reduce your premiums is to give up smoking for at least 12 months.
- Occupation. What you do for a living can affect how much you pay for life insurance. If you are an underground miner for instance, you are considered to be in a high risk occupation. The best way to alter this and reduce your premiums would be to move to a lower risk occupation.
- Lifestyle. The things you do in your spare time can also have an influence on your risk rating. If you pursue risky pastimes such as rock climbing or driving fast cars, then your premiums may be higher. And you must tell your insurer about these pastimes, because if you don’t and you die as a result of them, you would not be covered.
- Current medical condition. Depending on the policy and level of cover, you may be required to have a medical examination. A policy that does not require this generally provides less cover than one that does.
- Past medical history. Any pre-existing medical conditions you have or have had in the past can affect your premiums. They generally make your insurance more expensive and may even exclude you from cover in some situations.
- Amount and period of cover required. How much cover you take out and for how long will directly affect the cost of your life insurance. The greater the amount and the longer the period, the higher your premiums will be.
Premium structures: stepped or level
When you take out life insurance, you usually have a choice of stepped or level premiums and which structure you choose can have a significant impact on how much you pay. Stepped premiums are premiums that are recalculated by the insurer at each policy renewal as you get older and your level of risk increases. Level premiums are averaged out over the life of the policy so that you pay the same amount every time. Stepped premiums are more advantageous when you are younger, because they are cheaper than level premiums, but as you get older they will become more expensive and unless your income has increased as well, they will become more difficult to pay. Level premiums are less advantageous when you are younger as they are higher than stepped premiums, but as time goes by, they will become less burdensome as your income will also increase over time. As a general rule, stepped premiums are more suitable for those who only require short term life insurance, while level premiums are more suited to those seeking long term cover. You should seek professional advice before committing to one or the other however, as their benefits will depend on your particular circumstances. What if I can't afford to pay my life insurance premium?
Dangers of underinsurance
Research has determined that the majority of Australians are underinsured. The danger this poses with regard to life insurance is that, should you die prematurely, your family will not be protected financially and could lose everything you have worked for. Recent research has revealed that Australians are aware of the dangers of underinsurance, but are not motivated to purchase insurance in the current economic climate. The research suggested that incentives were needed to encourage them to do so and could include a government tax incentive, a tax dis-incentive and greater cover through superannuation funds.
How to get life insurance
The steps involved in taking out life insurance are similar to those you should employ when choosing any kind of insurance.
- Determine how much cover you need and can afford, based on the amount your beneficiaries would require to maintain their lifestyle if you were gone.
- Determine how long you will need cover for, factoring in likely changes to your assets and lifestyle in the future.
- Compare policies and quotes online to determine which provides the best cover and best value for money.
- Talk to an insurance adviser or consultant or approach an insurer directly if you are confident about your cover needs.
When comparing life insurance policies, it is important to consider:
- The cost in relation to the cover provided
- Any exclusions or restrictions which could limit the extent of cover
- Whether the premiums are CPI-indexed to keep pace with inflation
- Whether the policy has guaranteed future reliability, allowing it to be renewed without further medical underwriting.
- Whether it has a funeral advancement benefit to cover funeral expenses
- Whether it includes the option of joint cover for your spouse (can save you up to 10% on your premiums).
Life insurance FAQ
Q: What is life insurance?
- A: It is insurance that provides your beneficiaries with a lump sum benefit should you pass away or be diagnosed with a terminal illness and have less than 12 months to live.
Q: Why is life insurance important?
- A: Because it helps to secure your family’s financial future if you are no longer there to provide for them.
Q: I’m young and healthy. Why do I need life insurance?
- A: Because as premiums are based on age and health, the longer you wait to get it, the more expensive it will become.
Q: Can I get an advance payment of my life insurance benefit?
- A: Yes. You can claim your full benefit amount if you are diagnosed with a terminal illness and have less than 12 months to live.
Q: How does an automatic increase benefit work?
- A: Premium amounts are automatically increased by around 5% on each policy anniversary to keep pace with the cost of living.
Q: Will I get a refund if I cancel my policy?
- A: If you cancel it during the 30 day cooling off period, you will get a refund of any premiums you have paid.
Q: Do I need to have a medical examination to get life insurance?
- A: It will depend on the insurer and on factors such as your age, height to weight ratio and previous medical history.