Life insurance for farmers

As a farmer, there's a lot of responsibility on your shoulders. Life insurance is designed to help ease that burden.

How does life insurance work?

Life insurance provides financial protection if something life-changing happens to you, like a serious illness, disablement or death. You purchase a policy from a life insurance provider and pay regular premiums for it (either weekly, monthly or annually). In return, they agree to pay a substantial sum of money to your beneficiaries (the people you list on your policy) if you are seriously injured, become ill or die. With most life insurance policies, you will usually receive your payout in the form of a lump-sum payment.

Can farmers get life insurance?

Yes. Farmers can choose from a range of life insurance options, including:

• Life insurance (death cover): This is the main type of life insurance. It pays out a lump sum payment when you die, with the money going to the people you nominate on your policy. It can cover any immediate expenses, as well as pay off your mortgage, manage any ongoing costs and allow your family to maintain their current lifestyle.
• Trauma cover: This covers you in case you're diagnosed with a critical illness. It pays you a lump sum, which you can use to cover costly medical and rehabilitation costs.
• Total and permanent disability (TPD) insurance: You might find this bundled with life insurance. It provides you with a lump sum payment if you're forced to permanently quit work due to serious illness or injury.
• Income protection insurance: This type of insurance provides you with up to 75% of your working income (usually based on the previous 12 months) if you're not able to work due to injury or illness. You'll usually receive it in monthly instalments.

How are farmers categorised when buying life insurance?

Insurers classify different types of agricultural workers based on the kind of work they do. This means that there are different classifications for different farmers. Here are some common ways insurers might categorise you:

Job type	Classification
Farm labourer/employee	High risk. Farmworkers will typically have to pay a higher premium to get life insurance.
Farm manager	This depends on the individual considerations of your role, your duties and where you live.
Farm owner	Medium to high risk. You will likely have a premium loading applied to your policy. However, harvesting contractors are often uninsurable.

Key benefits of life insurance for a farmer

Some of the benefits of getting life insurance if you are a farmer include:

• Enough cover to pay off debts and more. There are comprehensive life insurance policies, like ones from NobleOak, that provide up to $25,000,000 of cover to be paid out to your beneficiaries or your estate when you die. This ensures that you leave behind enough to pay off any debts that you may still have and to allow your family to comfortably get by.
• You won't need to sell your farm. There's often a significant emotional attachment to the farm that you work and live on. Maybe it's been in the family for generations or you would like it to be. Life insurance can reduce or eliminate farm debts so that you and your family don't need to worry about selling your farm if something serious happens.
• Spouse cover. If you become unable to work or you die, it's likely that someone else will need to be hired to help your spouse to continue to run the farm. Life insurance can ensure that you have enough money to pay someone to help your partner do essential chores and duties around the farm.
• Terminal illness benefit. If you're diagnosed with a terminal illness and given less than 12 months to live, some life insurance policies will advance your life insurance cover, paying you a substantial benefit before you pass away.
• Funeral benefit. Some insurers will also pay a funeral advance benefit when you pass away, so that your family can cover all of the associated expenses.

Criteria to be aware of

To ensure you know exactly what you're paying for, be aware of the following criteria:

• Maximum cover level. All policies will have a maximum benefit level. This is the maximum lump sum amount that you will receive when you pass away. When calculating how much you think you will need, take into consideration debts, loan repayments, bills and living expenses. If you're unsure how much you need, it might be worth speaking to an adviser.
• Maximum entry age. To be eligible to apply for life insurance, it's common that you will have to be below a certain age, usually around 70. It is still possible to get life insurance when you are older than 70 though. Life insurance is also generally only available to Australian residents and citizens.
• Expiry age. Different to a maximum entry age, policies with an expiry age will have an age limit after which you can't make any more claims. 99 is a common expiry age for life insurance.
• Stepped or level premiums. Stepped premiums increase with your age, while level premiums remain the same despite your age. Level premiums are usually more expensive at the beginning but will be cheaper than stepped premiums as time goes on.
• Future insurability. A Guaranteed Insurability Feature ensures that you are still covered as you get older and your personal situation inevitably changes.

Frequently asked questions

• What type of life insurance is available for farmers?

  Farmers can opt for a range of different life insurances including death cover, critical illness insurance, TPD cover and income protection.

• How does crop insurance work?

  Crop insurance can provide cover against crop failures or damage due to adverse weather conditions, pests, or disease. It can help with a payout owing to a failed or damaged crop.

• Which insurers cover hobby farms in Australia?

  There are a range of different insurers who may provide insurance for hobby farms. 3 you could try include NRMA Insurance, CGU Insurance and Elders Insurance.