How Much Does Life Insurance Cost in Australia?
Life insurance can provide financial peace of mind by helping protect loved ones if you pass away. In Australia, the cost of life insurance is primarily determined by the premium you pay, which is usually charged monthly or annually. Because policies can be tailored to your age, circumstances and lifestyle, there is no single “standard” price. Instead, premiums vary depending on the choices you make when selecting cover and the information you provide during the application process.
The main cost: your premium
When you take out a life insurance policy, the main ongoing cost is the premium. This is the amount you agree to pay to keep the policy active. Premiums can be paid monthly or annually, and the amount will differ from one person to another.
In general, different levels of cover and different lengths of cover come with different premiums. That means the type of policy you choose and the amount of coverage you select will influence what you pay. However, the cost is not only about the policy settings. Your health and lifestyle can also play an important role in how your premium is calculated.
What insurers ask about you (and why it matters)
When you apply for life insurance, you will typically be asked a range of questions about yourself and the way you live. These questions help the insurer assess your circumstances and set your premium accordingly. The questions commonly fall into three broad categories:
Personal or lifestyle questions: These can include your date of birth, gender and whether you smoke.
Medical questions: These may relate to pre-existing conditions.
Employment questions: These can include your occupation, your income and what you enjoy doing in your spare time.
Because these factors vary widely between individuals, premiums can differ significantly even when two people choose similar levels of cover. In other words, life insurance cost is personal: it reflects both the policy you choose and the information you provide during the application.
Working out how much cover you might need
One practical way to approach life insurance is to start with a question that can feel challenging: if you were to pass away and leave loved ones behind, how much money would they need to keep life on track?
To think this through, consider the financial commitments your family might need to manage. This can include debts such as a mortgage, as well as ongoing expenses that still need to be paid. Examples can include utility bills, grocery costs and school bills.
Next, consider what money your family might receive in those circumstances. This could include funds from the sale of investments, super, and personal savings.
If there is a discrepancy between what your loved ones would need and what they are likely to receive, that gap can be used as a guide when deciding how much life insurance coverage to opt for.
Why the type and level of cover affects premiums
Premiums are linked to the kind of cover you select and the amount of coverage you want. Choosing a higher level of cover may lead to a different premium than choosing a lower level of cover. Similarly, the length of cover can influence what you pay. The key point is that premiums are not fixed across all policies; they change depending on the cover settings and the individual factors assessed during your application.
Ways to reduce life insurance premiums
There are several ways you may be able to reduce your life insurance premiums. Some options relate to how you choose your policy, while others are linked to lifestyle.
Compare policies: Comparing policies can help you find one that best suits your circumstances. This can also help you understand what you are paying for and whether the policy features align with your needs.
Consider add-ons and extras carefully: Think about which add-ons and extras you actually need and which may not apply to you. The features you select can influence the premium you pay.
Check the terms and conditions: Review the policy terms and conditions so you are clear about how much you will need to pay in premiums and when payments are due.
Reduce lifestyle risks where possible: Cutting down on lifestyle risks such as smoking or drinking may help reduce premiums. More broadly, following a healthy way of life—such as adopting a healthy diet and exercise regime to keep blood pressure low—may also be relevant.
Think about the term of your policy: The term of the policy can affect premiums. Generally, the longer the term, the lower the premium. It may be worth considering cover that suits you for the long haul, or cover that can be tweaked and adapted as your circumstances change.
Premiums can change over time
Even after you take out a policy, premiums may not stay the same forever. Premiums are subject to review and can change depending on a number of factors. You will be sent information about your premiums before each policy anniversary, which can help you stay informed about any adjustments.
Keeping your cover aligned with your life
Life insurance is often chosen to support financial peace of mind, but the right policy for you can depend on your current situation and the needs of those who rely on you. Major life changes can prompt a review of your cover, especially when you are blending households, planning your future or re-evaluating finances. Reviewing your insurance can help ensure it still reflects your situation.
It can also be useful to understand what is available through super, as knowing what is on offer may help you find cover that works for you.
Putting it all together
The cost of life insurance in Australia comes down to the premium you pay, and that premium is influenced by the policy choices you make and the personal details assessed during your application. By working out how much cover your loved ones may need, comparing policies, and being thoughtful about extras, you can make more informed decisions about value and suitability. Over time, keeping an eye on premium reviews and revisiting your cover as circumstances change can help ensure your policy continues to match your needs.