We’ve partnered with Compare Club to bring you a range of life insurance policies to help you compare them side by side.
Life insurance is an important safety net for your loved ones if you pass away, become seriously injured or sick or are permanently disabled. However, knowing which policy is the right one for you and your family can be tricky, with so many options to choose from on the market.
Savvy can help you compare life insurance quotes from a panel of some of Australia’s leading insurers. By considering your options with us, you can weigh up a wide range of factors, such as costs and benefits, before you purchase your policy. Start comparing and get a free quote through us today.
What is life insurance and how does it work?
If you’re wondering what life insurance is, it’s a type of insurance which can cover you or your family financially if the unexpected happens, such as sustaining a life-changing injury, being struck down with a severe illness or dying unexpectedly.
It can allow your family to have some financial independence after you pass away by making up for lost income, which can help them keep up with any outstanding debt repayments and pay off your medical costs. For example, your family may struggle to keep up with the mortgage repayments if you die suddenly, but with a life insurance payout, this could be more manageable for them.
The way life insurance works is very similar to other forms of cover, such as health insurance or for your car or home and contents. When you take out your policy, you agree to pay a certain amount, known as a premium, every month or 12 months. In exchange for this payment, your life insurance company agrees to pay out a specific sum (usually between $100,000 and $2 million), which will depend on the type of cover you have. You’ll be required to nominate a family or a loved one as the recipient of this money if something does happen, which is known as the beneficiary of your policy.
What factors affect the cost of my life insurance?
When it comes to how much you’ll pay for your life insurance, there isn’t one single ballpark figure or amount for every person. That’s because the cost of your premium, much like most other types of insurance, depends on a set of factors. These include:
Your age is probably the biggest factor in determining the price of your premium. Life insurance premiums may increase every year depending on the type of policy you have, meaning you can expect to pay a higher premium if you’re over the age of 50 compared to someone who's 30 years old. This is because insurers are more likely to pay out on your policy than for someone in a younger age bracket.
Insurers may require you to undertake a medical examination or ask to check your health records to spot any pre-existing medical conditions. They’ll focus on a history of heart conditions or cancer, while also considering your weight, blood pressure and cholesterol. You're likely to pay a higher premium if you have long-term medical issues due to the chance of a claim being much higher.
Smoking or non-smoking
Being a smoker can almost double the cost of your life insurance policy because you have a higher risk of developing cancer and other diseases. This doesn’t just apply to those who smoke cigarettes, but also to those who use vapes, e-cigarettes, chew tobacco, smoke cigars or use a range of nicotine replacements such as patches. Smoking could double the ongoing cost of your life insurance compared to someone who doesn’t smoke at all.
Some occupations, such as law enforcement, firefighting and flying, are seen as more dangerous than others. Insurers will consider your employment history if you seek out life coverage. If your job puts you in harm's way, such as by exposing you to hazardous substances or tasks, you may pay more for insurance than someone who sits at a desk all day.
Family medical history
Life insurance premiums may be affected by your family medical history even if you don't have any pre-existing health conditions, particularly if there is a history of inherited disorders. These can include cancers, cystic fibrosis, birth defects and haemophilia, but will ultimately depend on your insurer and what's included in your policy's PDS.
The policy you choose
Ultimately, the cost of your life insurance will depend largely on the type of policy and provider you choose. While most providers use the same set of variables to determine how much you pay for your premium, the costs can jump around from insurer to insurer. That’s why it pays to compare your options with Savvy so you can get a better idea of some of the different coverage options available to you and how much they cost with different insurers.
How do I buy a life insurance policy through Savvy?
Purchasing life insurance is straightforward, especially if you do it through Savvy. If you’re in the market for a policy, you can follow these simple steps to buy a policy through us:
- Get a quote: you’ll first need to provide some general information about yourself and the type of cover you’re after, which will generate a range of premium estimates. This usually involves providing some personal details (such as your date of birth, contact information, whether you smoke and your job) and choosing the amount of coverage you need on your insurance.
- Compare with us: once you’ve done this, you’ll be able to receive and compare up to ten offers and premium estimates from Australian insurers through our partner. In the same way you wouldn’t buy a house or car without first shopping around, it's crucial to do your research before signing on the dotted line. After you’ve compared and picked an option, you can schedule a call back with a specialist to talk through the finer details of your policy.
- Purchase your policy: once you're happy with the policy you've selected, you can go ahead and purchase your chosen life insurance. Coverage may not be instant, however, so it's important to determine whether your policy comes with a waiting period.
Types of life insurance
Life cover can pay a nominated beneficiary a lump sum if you’re diagnosed with a terminal illness or pass away. This type of insurance can provide your immediate family or another loved one some financial assistance to cover funerals, medical costs and day-to-day expenses.
If you’re injured or too sick to work for an extended period, income protection insurance is designed to help you focus on your recovery. You can be covered for up to 70% of your usual wage for a chosen period, such as five years or up to age 65, depending on the level of coverage you buy.
This type of insurance is designed to offer cover to those who are permanently disabled by injury or illness and are no longer able to work. You can choose to take out cover for an inability to work in your current job or in any role suited to your qualifications.
Trauma insurance is a type of policy which provides you with a lump sum payment in the event of a critical illness or major accident. The conditions eligible for claims will be outlined in your insurer's PDS, but can include cancer, heart disease, severe head trauma and cardiovascular disorders.
Why compare life insurance through Savvy?
How to compare life insurance
Take a good look at some of the inclusions in your policy and compare them to ensure you’re getting the most out of what you’re paying. Life insurance policies can come with benefits such as cooling-off periods, worldwide cover and funeral advancement cover. On top of their list of covered events and illnesses, they'll also usually include inflation-proofing, which means the value of your cover will increase automatically in line with inflation.
Top tips for choosing the right life insurance cover
By comparing life insurance quotes from multiple insurers, you can get a more comprehensive comparison of different policies. This means comparing factors like the cost of your policy, the benefits it provides you and some of the things your insurer excludes.
Make sure the benefit you’re choosing is enough for your loved ones to live in your absence. You’ll normally get options ranging up to $2 million, so ensure you weigh up what your family would have to live on if you died and pick a benefit size that would allow them to live comfortably.
Key information regarding your insurance can be found in the PDS, which can be obtained on the insurer’s website and sent to you by one of our partner’s Specialists. By taking the time to familiarise yourself with what is and isn’t covered, you can gain a greater understanding of the amount of coverage you’ll be receiving when you sign up with your chosen insurer.
Look at your household income and other revenue streams before deciding on which policy to buy and which insurer to buy it with. This will help guide you towards the most appropriate coverage for you and your family.
Pros and cons of life insurance
Protection for your loved ones
The most significant benefit of life insurance is the peace of mind it gives your nearest and dearest if something happens to you and you can no longer provide for your family. Your spouse, children, or significant other will be able to cover funeral, grocery and mortgage costs with the payout they receive when you pass away.
Can clear your debts
If the unexpected happens and you become unable to earn a regular income, your life insurance can cover the regular payments on existing debts, including credit card payments, your mortgage and other financial liabilities.
Certain payouts are tax-free
In Australia, life insurance payouts are often made tax-free to dependents. As such, if your spouse or loved one receives money from your policy if you die, this lump sum may not attract income tax. However, those who aren’t financial dependents receiving your payout could be taxed heavily.
Low premiums for young people
If you’re under the age of 40, chances are your policy will be cheaper than an older individual, as there’s a lower risk of your insurer needing to pay out because of your age.
Can be costly
Life insurance can cost hundreds of dollars (and possibly even more) every month, putting a severe dent in your budget when you may not make a claim for many years.
Potentially complex claims process
Claims on life insurance policies can be complicated and time-consuming. If it’s unclear initially whether the incident’s medical conditions are within the scope of the policy, payment of the claim may be delayed. Situations when a claim could be invalid include when it’s unclear whether an injury was intentional or unintentional. However, unlike direct insurance, which assesses at the time of claim, retail insurance assesses at the time of purchase, which makes things much easier.
You may not qualify
To qualify for life insurance, applicants may be required to pass a medical exam which includes giving blood and urine samples. Your application may be delayed or denied if you don’t meet the life insurance industry’s stringent underwriting standards. However, you won’t be required to undergo an exam in all cases.
Frequently asked questions about life insurance
Helpful life insurance guides
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Savvy is partnered with Compare Club Australia Pty Ltd (AFS representative number 001279036) of Alternative Media Pty Ltd (AFS License number 486326) to provide readers with a variety of life insurance policies to compare. Savvy earns a commission from Compare Club each time a customer buys a life insurance policy via our website. We don’t arrange for products to be purchased from these brands directly, as all purchases are conducted via Compare Club.
Savvy does not compare all life insurance policies or providers currently operating in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.
For any further information on the variety of insurers compared by Compare Club or how their business works, you can read their Financial Services Guide.