What is a whole of life insurance policy?

Whole of life insurance, or simply whole life insurance, provided cover for the insured's entire life as long as the premiums were paid. A portion of the premium paid went towards an investment component that could be accessed when required; most had a maturity date when they were accessible.

Does Australia have whole life insurance?

No, whole life insurance is no longer available in Australia and may only be held by those who purchased policies before 1992.

Why is whole life insurance not available in Australia?

The main difference between whole life and the now more popular term life insurance was that you could invest a portion of it and withdraw funds from this when you retired. Once superannuation was made compulsory in 1992 there was no longer any need for that investment portion of the policy, and term life insurance became more popular.

What is the main disadvantage of whole life insurance?

One of the main disadvantages of whole life insurance was that premiums were much higher compared to term life insurance.

Which is better term or whole life insurance?

Whole life insurance has decreased in popularity and is no longer available in Australia. Term life insurance is now considered a better way to plan for a death benefit payment to help your family cope financially if life does take a turn for the worse.

Whole life insurance

Whole life insurance was popular in the '70s and '80s, but it's no longer sold in Australia. A reliable alternative that can provide a safety net for you and your family is term life insurance, which is now used instead of whole life insurance.

The main 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.

How did 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.

Cost difference between whole life insurance and term life insurance 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 were the advantages and disadvantages of whole life insurance?

Advantages	Disadvantages
Peace of mind of having a lifelong protection. Often used as mandatory savings. Access to cash when your circumstances change. Premium remains the same throughout the life of the policy, regardless of your age. Guaranteed death benefit. Your cash value portion will continue to grow each year with guaranteed interest earnings. Possible dividend earnings, which can be used to increase your cash value, reduce premiums, or withdrawn for other purposes. Possibility to save money to fund your retirement.	Premiums are much higher compared to term life insurance. Not flexible when you need to increase or decrease your cover. The cover amount does not keep up with inflation, which puts your beneficiaries at risk of underinsurance at the time of claim. Poor investment choice as the interest you earn on the cash value may be lesser than other available investment alternatives. They were also very high fee products, paying commissions to the advisers who sold the policies.

Peace of mind of having a lifelong protection.
Often used as mandatory savings.
Access to cash when your circumstances change.
Premium remains the same throughout the life of the policy, regardless of your age.
Guaranteed death benefit.
Your cash value portion will continue to grow each year with guaranteed interest earnings.
Possible dividend earnings, which can be used to increase your cash value, reduce premiums, or withdrawn for other purposes.
Possibility to save money to fund your retirement.

Premiums are much higher compared to term life insurance.
Not flexible when you need to increase or decrease your cover.
The cover amount does not keep up with inflation, which puts your beneficiaries at risk of underinsurance at the time of claim.
Poor investment choice as the interest you earn on the cash value may be lesser than other available investment alternatives.
They were also very high fee products, paying commissions to the advisers who sold the policies.

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:

Characteristics	Whole Life Insurance	Term Life Insurance
Cost	More expensive, due to the investment portion of the policy.	More cost-effective.
Length of Cover	Covers you for your entire life, provided that premiums are paid when due.	Remains active for the term selected by policy owner at time of application. This can usually be renewed into the future.
Flexibility	Not so much - you can’t change your cover amount when your needs change.	Very flexible - you can apply to increase your cover when necessary without having to provide further medical evidence.
Inflation	Death benefit stays the same, regardless of the inflation rate, which may result in insufficient cover in the future.	Cover is automatically increased each year to keep up with inflation.
Features and Benefits	The cash value component allows you to borrow funds when required, used as a collateral against a loan, or to pay for your premiums.	Greater range of features and benefits that you can tailor to suit your needs. You can also link term life with other types of life insurance to cover temporary and permanent disability.

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.

Get a quote for 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.

Product	Finder Score	Funeral Benefit	Optional TPD Cover	Optional Trauma Cover	Maximum Cover
TAL Accelerated Protection Life Insurance Finder AwardBonus	Finder score 9.9 Excellent	Funeral Benefit $25,000	Optional TPD Cover $3 million (maximum cover)	Optional Trauma Cover	Maximum Cover No set limit	Our verdict: One of Australia's leading life insurers. Automatically includes child critical illness cover. Plus, it comes with a level premium option (e.g. costs remain similar as you get older). ⭐ Current offer: Get up to 15% off your TAL Life, Trauma or TPD insurance policy for life - if you have a Body Mass Index (BMI) between 19 and 28 at the time of your application. Offer T&Cs on insurer website apply.	Get Quote View details Compare	loading Fetching your data...
Medibank Life Insurance	Finder score 9.6 Excellent	Funeral Benefit $15,000	Optional TPD Cover $1.5 million (maximum cover)	Optional Trauma Cover	Maximum Cover $2.5 million	Our verdict: Medibank offers a higher payout limit ($2.5 million) than 15 other providers. It also won Most Loved, Best Value and Legendary Service categories in the Finder 2024 Customer Satisfaction Awards. ⭐ Current offer: Get a 10% discount if you're already a Medibank Health Insurance member.	Get Quote View details Compare	loading Fetching your data...
ahm Life Insurance	Finder score 8.2 Great	Funeral Benefit $15,000	Optional TPD Cover $1 million (maximum cover)	Optional Trauma Cover	Maximum Cover $1.5 million	Our verdict: ahm offers a simple application process. Be approved online or over the phone. No medical or blood tests needed to apply. ⭐ Current offer: Get a 10% discount if you're already an ahm Health Insurance member.	Get Quote View details Compare	loading Fetching your data...
Real Life Insurance Bonus	Finder score 7.5 Great	Funeral Benefit $20,000	Optional TPD Cover $1 million (maximum cover)	Optional Trauma Cover	Maximum Cover $2 million	Our verdict: The application is simple; it can be done with 1 phone call and there are no medical exams. ⭐ Current offer: Get 10% cash back of the premiums you've paid after your 12-month anniversary with The Real Reward™.	Get Quote View details Compare	loading Fetching your data...
Zurich Ezicover Life Insurance Bonus	Finder score 6.8 Standard	Funeral Benefit $15,000	Optional TPD Cover	Optional Trauma Cover	Maximum Cover $1.5 million	Our verdict: Good if you want a cheap policy from a well-regarded insurer – its 98% claims acceptance rate is higher than any other provider on Finder. Zurich keeps things simple: unlike others, it doesn’t go in for optional add-ons such as TPD or trauma cover. ⭐ Current offer: Policy discounts include 10% off for your partner if you sign up for a joint policy. You can also get 5% off income protection if you buy it alongside your life cover.	Get Quote View details Compare	loading Fetching your data...
AAMI Life Insurance Bonus	Finder score 6.4 Standard	Funeral Benefit $10,000	Optional TPD Cover	Optional Trauma Cover	Maximum Cover $1.5 million	Our verdict: There’s flexibility with AAMI as you can add another adult to your cover, with a competitive limit of $1.5 million. Easy application process with no medical exams. ⭐ Current offer: Save up to 10% on premiums every year for the life of the policy on AAMI Life Insurance. Offer ends 31 July 2025. T&Cs apply.	Get Quote View details Compare	loading Fetching your data...
Suncorp Life Insurance Bonus	Finder score 6.4 Standard	Funeral Benefit $10,000	Optional TPD Cover	Optional Trauma Cover	Maximum Cover $1.5 million	Our verdict: Competitive maximum cover limit of $1.5 million. Suncorp lets you change your cover amount by up to $100,000 after a big life event, such as having a baby. ⭐ Current offer: Save up to 10% on premiums every year for the life of the policy on Suncorp Life Insurance. Offer ends 31 July 2025. T&Cs apply.	Get Quote View details Compare	loading Fetching your data...
MLC Life Insurance	Finder score	Funeral Benefit $20,000	Optional TPD Cover $5 million (maximum cover)	Optional Trauma Cover	Maximum Cover No set limit	Enquire now View details Compare	loading Fetching your data...
OnePath Life Insurance	Finder score	Funeral Benefit $25,000	Optional TPD Cover $5 million (maximum cover)	Optional Trauma Cover	Maximum Cover No set limit	Enquire now View details Compare	loading Fetching your data...
AIA Life Insurance	Finder score	Funeral Benefit $25,000	Optional TPD Cover	Optional Trauma Cover	Maximum Cover No set limit	Enquire now View details Compare	loading Fetching your data...

Frequently asked questions

The main difference between whole life and the now more popular term life insurance was that you could invest a portion of it and withdraw funds from this when you retired.
Once superannuation was made compulsory in 1992 there was no longer any need for that investment portion of the policy, and term life insurance became more popular.

Thank you for your feedback!

To make sure you get accurate and helpful information, this guide has been edited by Gary Ross Hunter and reviewed by Karen Eley, a member of Finder's Editorial Review Board.

Written by

Richard Laycock

Editor

Richard Laycock is Finder’s insights editor after spending the last five years writing and editing articles about insurance. His musings can be found across the web including on MoneyMag, Yahoo Finance and Travel Weekly. Richard studied Media at Macquarie University and The Missouri School of Journalism and has a Tier 1 Certification in General Advice for Life Insurance. See full bio

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