Whole Life Insurance

Whole life insurance was popular in the '70s and '80s, but it's no longer sold in Australia. Thankfully, there are reliable alternatives that can provide a safety net for you and your family.

These days, term life insurance is used instead of whole life insurance. The only real difference between the two is that whole life insurance used to include an investment portion, which Aussies could withdraw funds from when they retired.

When superannuation was made compulsory, there was no longer any need for that investment portion of the policy, and term life insurance became more popular.

Get a quote for term life insurance

Term life insurance is considered more affordable than whole life insurance, and it's still possible to find a policy with no age limits. The options below also have an expiry age of at least 99 so long as you keep paying your premiums.

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Name	Product	Maximum Cover	Maximum Entry Age	Expiry Age	Terminal Illness Benefit
NobleOak Life Insurance Finder Award		$15,000,000	69	99	$3,000,000	Get Quote View details	Compare	loading Fetching your data...
Real Family Life Cover		$1,000,000	64	No expiry age as long as premiums are paid	$1,000,000	Get a refund of 10% of the premiums you've paid (in the first 12 months) with The Real Reward™ .	Get Quote View details	Compare	loading Fetching your data...
Zurich Ezicover Life Insurance		$1,500,000	69	99	$1,500,000	Get the first month free and a 10% discount if you take out a second life insurance policy (discount applies to second policy). T&C’s apply.	Get Quote View details	Compare	loading Fetching your data...
Guardian Life Insurance		$1,500,000	64	No expiry age as long as premiums are paid	$1,500,000	Get Quote View details	Compare	loading Fetching your data...
AAMI Life Insurance		$1,500,000	65	99	$1,500,000	Get 5% off for existing customers.	Get Quote View details	Compare	loading Fetching your data...
ahm Life Insurance		$1,500,000	65	No expiry age as long as premiums are paid	$1,500,000	ahm Health members can save 10% off premiums.	Get Quote View details	Compare	loading Fetching your data...
Medibank Life Insurance		$2,500,000	70	No expiry age as long as premiums are paid	$2,500,000	You could win a $1000 EFTPOS gift card when you get a Life Insurance quote by 2 Feb 2021. There’s a winner each week. Plus, Medibank health members save 10% every year. T&Cs apply.	Get Quote View details	Compare	loading Fetching your data...

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Level of Protection UnsureNone$100,000$200,000$300,000$400,000$500,000$600,000$700,000$800,000$900,000$1,000,000$1,250,000$1,500,000$1,750,000$2,000,000

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How does Whole Life Insurance work?

Before superannuation was made compulsory, most workers used whole life insurance as a means of providing funds for when they retired, by surrendering their policies so they could access the policy’s cash value. A portion of the premium paid for whole life assurance having been put aside for investment purposes and another to fund the insurance cover.

How much does Whole Life Insurance cost in Australia?

Whole life insurance was considerably more expensive to low cost term insurance, due to the cash value component. However, it is important to note that while the guaranteed earnings you can get with whole life insurance is attractive, often the interest you receive from the investment portion does not pay any more than when you have savings account with a bank.
However, some might still consider whole life to be a worthy investment in Australia, this is because whole life was seen as forced savings and by having a cash value component. Policyholders had the assurance that the life insurance company would have to pay out on whole life insurance one way or another, either in event the life insured’s death or when the policy was surrendered.

What are the advantages and disadvantages of Whole Life Insurance

Whole of Life policies presented a number of benefits and drawbacks to owners of this type of cover. Let’s review these;

It is important to note that although whole life insurance policies are generally regarded as “whole of life,” they do in fact expire when you turn 100 years old. This means, if you were to live to 100 or more, the policy would mature and the face value would then become payable.

• Is Whole Life Insurance still available in Australia?

  Whole life insurance availability ceased in Australia having been taken over by superannuation when the Keating Labor (Federal) government made such protection compulsory in 1992 - as means of providing sufficient retirement funds for a fast aging population. Superannuation contributions by the employer and employee being invested in group amounts are able to attract large returns that allowed fund members to retire independently of government. Superannuation also includes a term life insurance component that pays a death benefit should the fund member die before reaching retirement age.

  The forced take up of superannuation within the community saw the demise of whole life insurance as superannuation provides similar protection as did whole life insurance but at far lower cost and far greater returns. However, whole life insurance did provide a much needed insurance cover even though it was never able to provide the large amounts at the same cost as could term insurance.

• Can I still obtain Whole Life Insurance quotes online?

  As previously mentioned, whole life insurance in Australia has been superseded by the more flexible and cost-effective term life insurance. Therefore, it is no longer possible to request an online quote for whole life insurance policies.

• Why is Whole Life Insurance no longer available?

  Whole life insurance policies were generally used to serve multiple purposes - to provide a death benefit, investment vehicle and savings for retirement years. However, over the years the confidence in whole life policies began to lack as inflation impacted the benefit amount, and was proven to be inadequate to support a comfortable retirement due to the increased cost of living.

  Another reason for the loss of popularity was the poor performance of the investment component of whole life policies, which were focused primarily in fixed interest securities, especially in times of rising inflation and interest rates.

  Whole life insurance policies continued to lose support as the commission and expenses incurred from establishing these policies accumulated up to two years worth of premiums, which in turn significantly affected the cash value in the early years.

  Therefore, when superannuation became mandatory and term life came into the Australian market, whole life insurance was no longer offered by life insurance companies.

What's the difference between whole life and term life insurance?

Similar to whole life insurance, term life cover provides a lump sum death benefit in the event that the policyholder passes away while the policy is still active. There are some notable differences between whole life and term life insurance. These include:

Financial advisers will often recommend term life insurance for insurance purposes and suggest that you find other ways to invest the remainder of your money, but this depends on how much money you have available for investment purposes and whether you have the capital available to take advantage of the most profitable investments.

How long can term life insurance be taken out for?

You have the power to select a period of cover most suitable for your situation. Applicants usually select terms of 5, 10, 15, 20 and 30 years. Another benefit of term life insurance is that you will continue to be insured in the future as long as you meet the premium payments when due, regardless of any changes to your health, occupation or pastimes.

How are premiums paid for?

You are also in control of choosing the premium structure that best suits your financial situation:

• Stepped
• Level
• Hybrid

Will Whole Life Insurance ever return to the Australian insurance industry?

An important question was raised in a recent MDRT gathering for financial professionals in 2013 on whether the time has come for whole life product to make its comeback to the Australian market. Jeffrey Ranz, a US based adviser, shared his opinion that the major distinction between term life and whole life policies comes down to ‘when’ and ‘if.’ The question with term life insurance is ‘if’ the policy will provide a payout, while whole life is a matter of ‘when’ the policy will be paid. Ranz concluded that whole life insurance is the only cover that can guarantee this 100% of the time, but not so much with term life insurance.

The Australian market may one day see the revival of whole life insurance when the industry sees the merits of bundled life insurance and savings/investment plan.