How To Get Cheap Life Insurance In Australia Without Compromising on Value

Published: February 21, 2018

Find the best cheap life insurance quotes online and save big on premiums.

You can find cheap life insurance and provide your family with financial security without breaking the bank. To get the cheapest term life insurance in Australia you must first know your personal needs, then compare multiple quotes from leading insurers, and finally review your product disclosure statement (PDS) and make sure you understand the policy definitions, so you know what’s covered and what’s not.

This article aims to help you understand what factors influence your premium price and provide you with tips on how you can keep your premiums affordable without compromising on value.

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What impacts the affordability of my life insurance rates?

It’s important that you don’t confuse affordability with value. A cheap life insurance policy won’t necessarily offer you what you require regarding coverage and could end up costing you more when your claim payout is not sufficient.

The top 8 factors that affect your life insurance premiums

  • Your level of cover

    A higher cover amount usually equals a more expensive premium. However, generally, if you purchase a significant amount of cover you’ll pay less per $1,000 of the total amount.

    It’s important to choose a level of cover that is appropriate to your circumstances and budget. You might want to first speak with your broker to help you determine the right amount of life insurance you need based on your current income, family structure, and other financial commitments.

    How much life insurance do I need?

    • First, calculate your financial obligations: Multiply your annual salary by the number of years you want to replace your income for, taking into account your debts, mortgage balance, and potential future needs (children’s education).
    • Second, determine your liquid assets: Savings, plus financial investments, plus your existing life insurance.
    • After that, subtract your liquid assets from your financial obligations to get an estimate of the amount of life insurance you need.
  • Premium Type

    Your insurer will generally provide you with a choice between stepped, level, and hybrid premiums.

    • Stepped premiums: Your premiums start out more affordable, but will increase as you age. This premium style is cheaper in the short-term as you only pay for the level of risk associated with your current age. Keep in mind that your premiums will increase as you get older and could become unaffordable in the long-run.
    • Level premiums: Premiums start more expensive than stepped premiums but don’t increase annually with your age. Level premiums generally only increase due to the automatic Consumer Price Index (CPI) increases.
    • Hybrid premiums: Select insurers will offer you the premium option that gives you the best of both worlds. Your premiums start out slightly higher than stepped premiums and usually increase annually until your policy reaches a pre-agreed upon age. Your premiums then convert to level premiums and generally only incur CPI increases. Some insurers may convert your premiums back to stepped premiums and continue with annual increases when you reach the age of 65+ years old.
  • Your Age

    The younger you are, the cheaper your premiums will usually be because you’ll generally be healthier and more active and thus a lower risk of possibly claiming in future. That’s why you’re encouraged to take out cover as soon as possible and not leave it until you’re much older and incur higher premiums as a result.

    If you’re young, single and without dependents, a good place to start might be in purchasing income protection and critical illness cover, so you can cover your day to day expenses should you become ill or injured for a specified period of time.

  • Overall health, including smoking status and BMI

    Your overall health indicates how big of a risk you are to insure and in turn influences your premium rate. Typically, an insurer will ask whether you are a smoker and your height and weight so they can calculate your Body Mass Index (BMI).

    Smoking increases your risk of getting lung cancer, stroke, and heart disease, and as a smoker, your premium could double that of a non-smoker. Your BMI also increases your health risks, including high blood pressure, and coronary heart disease. Typically, a BMI of 25 to 29.9 means you are overweight, while a BMI of over 30 indicates obesity.

  • Family history

    Certain diseases are considered to have a hereditary component. For instance, if you have a history of breast cancer in your family, it will usually be taken into consideration when calculating your overall risk.

    If you have such a family medical history, the insurer might add an exclusion or loading to your policy depending on the insurer and their underwriting guidelines. The insurer may also request that you go for a medical exam.

  • Lifestyle (high-risk activities)

    Individuals participating in high-risk activities, like rock climbing or skydiving, might be rated as a higher risk. Thus you could pay a higher premium or have an exclusion on your policy, depending on the insurer. The same applies to your occupation, all things being equal, a person working a desk job might not pay as much as a person working in a mine.

    It’s important to check with your insurer and fully disclose your hobbies. What one insurer considers high risk, another may not.

  • Your location

    The state you live in may affect your life insurance premiums. If your area is statistically proven to be dangerous and reflects a higher mortality rate, then you are more likely to incur higher premiums.

  • Built-in benefits vs paid options

    Generally, a life insurance company which has included a variety of built-in benefits with their life cover might charge higher premiums because they are seen as offering more value.

    It might be more affordable to find a basic life insurance policy without all the bells and whistles and only pay for the additional features and benefits you want.

Compare cheap life insurance from Australia’s top companies

Company Policy Average Monthly Premium Expiry Age Free Child Cover Health Reward Program
Priority Protection Vitality – Life Cover $33.31 99 Up to $20,000 Death Cover only for ages 2 to 15 years old AIA Vitality
Accelerated Protection – Health Sense – Life Insurance $37.87 99 Up to $10,000 between 1 and 18 years old Tal Health Sense
Elevate Insurance Solutions – Life Insurance $40.85 99
Option at additional cost
Complete – Healthy Life Option – Life Cover $42.17 99 Up to $10,000 for children aged between 2 and 20 years old Healthy Life Option only for Stepped Premiums and up to age 29
Insurance with On Track – Life Cover $43.52 100
Option at additional cost
MLC On Track
Wealth Protection – Death Cover $46.15 99
Option at additional cost
Life Solutions – Life Cover $46.96 99
Option at additional cost
Health Maintenance Reward
Above monthly premiums were calculated based on $1 million worth of cover for a 35-year-old non-smoking male living in Queensland.

11 Ways you can keep your premiums affordable

  • Ask your insurer to remove the Consumer Price Index (CPI) increase, which is generally automatically applied to insurance policies. Take note; your policy will no longer keep up with inflation.
  • Choose level premiums, or ask your insurer whether you can switch a level premium structure and whether they offer hybrid premiums.
  • Lower you cover amount. If you have reached retirement age and no longer have dependents or a mortgage to pay off, decreasing the amount of cover you have might be an option.
  • Make lifestyle changes, like aiming for a healthy BMI range and quitting smoking. After you’ve stopped smoking for 12 months, life insurance companies will generally rate you as a non-smoker.
  • Remove optional extras. Review your policies annually to make sure you’re cover is still relevant to your current circumstances and remove unnecessary paid for options.
  • Compare quotes from Australia’s top 10 life insurance companies to find the one that best fits your budget and requirements.
  • Look for insurers that have removed policy fees from their premiums, like ClearView Life Solutions and MLC Insurance.
  • Bundle policies if your insurer allows it and it makes financial sense. Bundled policies generally cost less than taking out separate stand-alone policies.
  • Purchase cover when you’re young because you might pay lower premiums due to your good health.
  • Pay your premiums annually and save between 5-8%.
  • Ask whether an insurer offers discounts when purchasing multiple policies (for you and your spouse) or multiple types of cover (for example life cover and income protection) from the same insurer. Also, query whether they have a rewards program you can benefit from.

Cheap life insurance isn’t always better

The cheapest life insurance policy isn’t necessarily the better option and price should never be your primary decision for purchasing a policy. Yes, you do need to ensure that your cover is affordable, especially in the long-run, but you also need to remember that the cheapest policy may prove insufficient, leaving your family financially vulnerable.

5 things to consider before choosing the best cheap life insurance company:

  1. Review your insurance needs and decide how much cover you require so as not to be underinsured or overinsured.
  2. Inquire about the company's financial strength, stability, and reputation for paying out claims.
  3. Read customer reviews could tell you a lot about a company’s trustworthiness and how your loved ones are likely to be treated at claim time.
  4. Consider the whole family, not just the policyholder and insured person.
  5. Ask questions as soon as you’ve found a broker or life insurer you are comfortable with. The more clarity you have on what is and what isn’t covered the easier it will be to agree on a policy that suits your requirements.

How to get cheap life insurance quotes online

This best way to find affordable life insurance quotes online is to visit an insurance comparison website and request quotes from the leading life insurance companies, then comparing their benefits, features and price side-by-side. Keep in mind that you’re more likely to find the right cover at the lowest price when comparing apples with apples, i.e. similar policy types offering more or less the same level of cover.

So, before you choose the cheapest life insurance policy available, make an informed decision by comparing your options first.

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  • Rotana


    Who is better to own the life insurance policy, the insured or the beneficiary? And why?


    • Specialist
      Anneke Van Aswegen

      Hi Rotana.

      The policy owner is generally the person responsible for paying the premiums and is the only one authorised to make changes to the policy. The beneficiary is the person nominated to receive the benefit should a valid claim be made.

      To determine which person should own your policy depends on your specific requirements. Please have a read of the two below articles to help you with your decision making process. You can also give us a call on 1300 743 254.
      1. Who should your policy owner be?
      2. How to choose a beneficiary.