Cost of life insurance in Australia

How much does life insurance cost?

How much you pay for a life insurance premium is going to be unique to your individual circumstances. This is because the price of premiums is essentially a reflection of how likely you are to make a claim in the eyes of an insurer. Some of the things that insurers consider to determine this include:

• • Age
  • Gender
  • Smoking status
  • Occupation
  • Lifestyle
  • How you buy life insurance
  • Current health and medical history
  • Amount and period of cover required
  • Policy inclusions
  • Stepped vs level premiums

How you choose to get cover and pay for it will also make a difference. Whether you choose to have stepped or level premiums on your policy will determine if your premiums change over time. Also, securing a policy directly from an insurer, using a broker, or arranging it through your super fund can all affect how much it costs you in the end.

Average monthly premium

We took a look at over 180 quotes from 12 of Australia's top life insurers to find the average monthly premium for a life insurance policy. Using a profile of an accountant earning $80,000, we found that age, gender, and smoking status made a significant difference in the cost of premiums. Here are some of the key takeaways:

• Premiums for men were more than $50 higher than premiums quoted for women.
• Smokers paid close to 100% more for their premium than non-smokers on average.
• The average premium for a 25 year old was five times less than the average premium for a 55 year old across men and women.

Provider breakdown - life insurance premium costs

The cost of life insurance can be quite different depending on the insurer you choose, even for the same level of coverage. This is because each provider has its own criteria for assessing risk, and how they weigh these factors will also differ. Some may lower their rates to be more competitive in the market, while others with higher admin costs might charge more to cover these expenses.

We looked at 12 of Australia's leading life insurers and found a substantial difference in the average monthly life insurance premium. For a policy with a $500,000 maximum benefit amount, the average premium was $108 per month. Read more about our methodology for collecting quotes. TAL offered the lowest average monthly premium at $69.62, while Insuranceline was the most expensive, with an average premium of $134.52.

Keep in mind these quotes should be used as a guide only. Life insurance is highly tailored and will differ based on your personal circumstances.

What affects the cost of life insurance?

• Age: The older you are, the higher your chances are to have medical complications on average, which raises your risk to insurers. That's why premiums are often higher for a 60-year-old compared to a 30-year-old for the same level of cover.
• Gender: Typically, insurers consider women to be lower risk because, on average, they tend to file claims less frequently than men.
• Smoking status: Smokers are considered high-risk because they tend to face more health issues, leading to higher premiums. However, some insurers will reward you if you stop. An insurer might offer you lower rates if you quit smoking for at least 12 months before applying for a policy.
• Current health and medical history: Whether or not an insurer deems you "healthy" plays a big role in how they price your premiums. Insurers may charge you more if you have any ongoing medical conditions or a history of serious illness. For instance, if you're at a higher risk of developing future health complications, this could lead to a substantially higher premium than someone without such conditions.
• Occupation: What you do for work matters to insurers. If you work in a field like underground mining or commercial flight, you could face higher premiums due to the greater chance of accidents.
• Lifestyle: Your hobbies and pastimes affect how insurers evaluate your risk. Engaging in risky activities like bungee jumping, riding motorcycles, or even contact sports can drive up your premiums.
• How you buy life insurance: Whether it's directly from an insurer, through a financial adviser, or as part of your superannuation, how you choose to purchase life insurance can impact your overall cost of life insurance. For example, going through a broker can come with a variety of fees, however they may be able to find a better deal on your premiums.
• Amount and period of cover required: The more cover you ask for and the longer you want it for, the higher your premiums will be. This is because the insurer is exposed to risk for a longer time and a larger payout.
• Policy inclusions: Bundling life insurance with other optional extras like total permanent disability cover (TPD), funeral cover, or income protection will impact the price of your premiums. While this can save you money compared to buying those extras separately, it can still increase the cost of your life insurance compared to a standalone policy.
• Stepped vs level premiums: Many life insurers will give you the option of having 'stepped' or 'level' premiums on your policy. Stepped premiums increase each year as you age, reflecting your higher risk, while level premiums stay the same throughout the life of the policy. Depending on the choice you make and how long you plan to hold life insurance, this can significantly impact the cost of your policy.

How to lower the cost of your life insurance premium

If you're looking to lower the cost of your life insurance premium, there are a few things you can do that can make a big difference.

• Shop around for a better deal: A great place to start is to shop around. Take time to compare prices from different providers. You might get a better price for the same level of cover, and some insurers will offer discounts and special deals if you switch policies.
• Check your coverage needs: If your needs have changed since you first bought life insurance, it might be time to trim the fat on your policy. Lowering your benefit amount or cutting out optional extras you don't need anymore can lower your premiums significantly. For example, if you've made significant progress in paying off debt, it might make sense to change your sum insured.
• Understand your policy options: Be aware of the difference between types of life insurance policies. For instance, term life insurance is usually cheaper than whole life insurance.
• Talk to your insurer: If you're having trouble paying your premiums or no longer feel like you can fit it into your budget, reach out to your provider. Many companies want to keep good customers and may have discounts and special offers to help you out.
• Make positive changes: Many insurers will reward you for making active changes to improve your health and lifestyle. Things like quitting smoking or just starting to exercise regularly can show you are less of a risk to make a claim and can lead to lower premiums.
• Change jobs: If you've switched to a less risky job, let your insurer know! This can reduce your risk in the eyes of insurers.

Frequently asked questions

• Is it worth getting life insurance in Australia?

  Whether life insurance is worth getting or not will depend on your individual circumstances. Knowing you and your family will be supported financially if something unfortunate happens can offer peace of mind. However, depending on a range of factors, including your age, health, and lifestyle, as well as the level of coverage you're looking for, will all impact how much you end up paying. It's good to consider these things when you look for life insurance policies so you can weigh up the cost of getting a life insurance policy with your budget.

• What is the average payment on a life insurance policy

  From our research of over 150 quotes from Australian life insurance providers, the monthly cost of a life insurance policy with a $500,000 benefit amount was $108.13. This is an average of non-smokers and smokers, men & women, and people aged 25, 35, 45, and 55.

Written by

Cameron Thach

Insurance Content Writer

Cameron is the local insurance scholar at Finder. With a diverse background writing in independent education, web-3, and finance, his mission is to build helpful content and that speaks to readers in language they understand. See full bio