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iSelect’s partnered with Lifebroker to help you compare a range of Life Insurance policies. Not all policies are available at all times or in all areas. Any advice provided on this website is general in nature and does not consider your situation or needs. Please consider if any advice is appropriate for you before acting on it. Learn more.
What is life insurance?
Life insurance refers to a range of insurance products designed to protect you and your loves ones financially if something were to happen to you, whether that’s your death, your inability to work for a time or permanently, or a diagnosis of a specific illness or injury.
What are the benefits of life insurance?
You may want life insurance for the peace of mind that comes with knowing there’s a financial safety net for you and your family. Knowing you can still pay the bills in the event of serious illness, injury or even death can mean one less worry during a stressful time.
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Life Insurance explained with Canna Campbell
Canna Campbell from SugarMamma TV explains Life Insurance need-to-knows in under two minutes.

Canna Campbell
SUGARMAMMA TV
Types of life insurance
Life insurance can refer to standalone life cover or be used as an umbrella term for a range of different insurance products to cover illness, injury and death. Let us explain.
Life cover
Sometimes called term life insurance or death cover, this is a lump sum paid to your nominated beneficiaries, like your partner or kids, when you pass away or if you’re diagnosed with a terminal illness.
Total and permanent disability (TPD) insurance
A permanent illness or injury may mean you can no longer work. Having TPD Insurance means you could be paid out a lump sum to help you manage rehabilitation, medical and living costs.
Income protection insurance
If you can’t work because of a total or partial disability, income protection insurance could mean you still have a percentage of your regular income flowing in.
Trauma insurance
Sometimes your most important job is to look after yourself. Trauma insurance pays a lump sum if you suffer from a specific critical illness or serious injury, like a heart attack or cancer diagnosis. Make sure to read the insurers product disclosure statement (PDS), as each insurer may have different medical definitions or what is and isn’t covered under the policy.
How much cover could I need?
Life insurance can be an important financial safety net, but it helps to know how much cover you and your family could need if something was to happen to you. For instance, funeral costs alone can range from $4,000 to $15,000.1Moneysmart – Paying for your funeral Ongoing living costs too, like rent or mortgage repayments, groceries, utilities and even clothes, may need to be considered too. This chart shows the average Australian’s monthly spends for these kinds of things to give you an idea of what your family might need.
Helpful tip:

When it comes to life insurance, don’t necessarily just go for the cheapest option, as this could leave you or your loved ones under financial stress should the unfortunate happen.
Instead, take the time to carefully think about how much it would cost you to maintain your family’s current lifestyle should you be unable to work, or how much your loved ones would need to maintain their lifestyle if you were to pass away.
Remember, you don’t have to take out all four types of cover (life, TPD, trauma and income protection) but instead should decide which are most relevant to your personal situation.
Finally, you should regularly review your life insurance cover to make sure it is still suitable, particularly around major milestones that change your financial situation, such as getting married, having a baby, buying a home or starting a business.
Eliza Ryan
Senior Marketing and Growth Channels Manager, Lifebroker
Your life insurance questions answered
What is the best life insurance policy?
When it comes to life insurance, there’s no ‘best’ or ‘one-size-fits-all.’ After all, we all have different lives. Our needs, budget, personal circumstances and lifestyle all play into what we’d like to see in an ideal policy.
Summing up a life can be tricky, so to get you started, there’s a few questions you could ask yourself:
- How much money do you need to pay your rent or mortgage?
- Do you have any other debts?
- Do you have anyone else who relies on your income?
- Do you need to consider childcare, education and other living expenses?
- How much money will you receive from your superannuation, shares, savings and any other insurance policies?
- How much paid leave do you have at work?
- What type of support could your family provide?
- Does your superannuation fund provide life insurance too?
- Do you have any medical conditions that could affect your claim?
Now’s the time to be exhaustive – you may want to boil the kettle for this work – so you can have a better picture of what exactly you’re looking for in a policy.
Alternatively, if you want to try and squeeze it all into a lunchbreak, you could use Moneysmart’s life insurance needs calculator. Just fill in a few sections and you could have a ballpark estimate for life cover.
What benefits does life insurance include?
The benefits, or features, of your life insurance can depend on the type of cover you have, as well as the individual policy. Remember life insurance refers to life cover (also known as term life insurance or death cover), as well as trauma insurance, TPD insurance and income protection.
Firstly, there are the financial benefits. Depending on the life insurance product or products you take out, this could either be a lump sum, such as a payment upon your death, or regular ongoing payments, like if you can’t work.
Beyond financial benefits, there may be certain features that make a policy stand out for you. For instance, it may provide advanced funds to help pay for your funeral. Financial planning support and grief counselling may also be other features that draw your attention when thinking about how your loved ones will manage once you’re no longer there.
Another feature you could be interested in is the ability to increase your cover without having to repeat the underwriting process. Your insurer may offer this for when you experience a major life event – including the good kind, like getting married.
How do you compare life insurance policies?
Once you have an idea of the cover you’re after, you can start comparing policies. Your criteria could look more like:
- Type of cover and if it’s relevant and beneficial for you
- Level of cover and if it would cover ongoing expenses
- Waiting periods and how these may apply
- Whether there’s stepped or level premiums
- What’s included and excluded like pre-existing medical conditions
- What’s needed to get cover like your medical history or an examination
To save you some of the legwork, you can always use the combined powers of iSelect and Lifebroker to compare a variety of different life insurance policies online.
How much does life insurance cost?
There’s no set in stone number for your life insurance premiums. Different factors can make their mark on your premium, including:
- Your level of coverage: This can include what types of life insurance you choose and what your benefit payments look like.
- Your age: As you age, you’re generally more likely to make a claim. To offset this, insurers may raise your premiums the more birthdays you celebrate.
- Your occupation: Some jobs come with more inherent risk, like working at heights or with heavy machinery. If that’s your job, your premiums might be higher than someone who works in an office, or you may even have a loading or exclusion on your policy.
- Your lifestyle: If you often have wild nights or just a regular cigarette break, these lifestyle choices could play a role in your premium.
- Your medical history: If you have a pre-existing medical condition or a family history of any conditions, including cancer, high blood pressure or diabetes, your Life Insurance may cost more.
How much cover can I apply for?
Theoretically, your cover could range from a few hundred thousand dollars to a million dollars or more. It depends on the level of cover you are after and what the insurer offers you. In practice, the amount of cover you can apply for can depend on your age and income, along with other factors.
You can also look at having multiple life insurance policies at once, like taking out life insurance while also maintaining some cover through your superannuation. This can get a bit tricky, though, as the two policies may affect each other if you do need to claim. You may also end up doubling up on cover.
Whether you opt for one policy or multiple, remember that there could be quite a difference between what you’re eligible for and what you actually need. Plus, there’s also that premium cost to consider and how it fits into your regular budget.
What is the difference between variable aged stepped and variable premiums?
When you take out a life insurance product, you will need to select a premium structure that suits your needs. Life insurers generally offer two different premiums structures: variable aged stepped premiums (previously known as ‘level premiums’) and variable premiums.
Variable age stepped premiums increase as you age, whereas variable premiums tend to be more stable over time. It’s important to be aware that neither premium structure is fixed, and premiums will increase overtime if the benefit amount increases, the insurer updates their premium rates, or in response in government charges and inflation.
Variable age stepped premiums
With variable age stepped premiums, cost of cover increases each year as premiums are based on your age at your policy anniversary. This is mainly because the likelihood of you making a claim increases as you age.
Variable premiums
Variable premiums will usually be more expensive to begin with, compared to variable age stepped. This is because the insurer calculates your premium based on your age when you take out the policy but then averages out this cost over a number of years. This means that over time, variable premiums may work out cheaper than variable aged stepped premiums.
Is life insurance tax deductible?
No, term life insurance (life cover) isn’t tax deductible, but the good news is that income protection premiums can be when premiums are paid outside of superannuation. While income protection insurance premiums are generally tax deductible, there are a few things to keep in mind.
For starters, you can’t claim income protection premiums if they’re taken from your super contributions.
The Australian Taxation Office (ATO) is also pretty clear about how payments from your policy are reported. Payments to replace your wages need to go on your tax return, like your regular salary would, whether they’re a lump sum or a repeat payment.
And what about other types of life insurance such as TPD or trauma insurance? Unfortunately not, only insurance to protect your income – salary and wages specifically – gets this treatment.
What is life insurance underwriting?
Underwriting is just the name for how your insurer determines your level of risk. Your risk affects the cost of your cover.
In underwriting your policy, your insurer will look at your personal circumstances to figure out your risk. This can include things like your age, gender, medical history, occupation, and even lifestyle. You have a duty to take reasonable care to provide accurate and complete information when your insurer asks – so no omitting that you spend every other weekend skydiving or rock climbing.
If you’re concerned about sharing your health information, remember that the life insurance industry’s code of practice means they can only ask you for health information that is reasonably needed to make their assessment.
Along with your responses, your insurer will use statistical data, including probabilities based on population statistics, to calculate your risk.
Will I still be covered if I travel overseas?
Your life insurance may cover you if you pass away overseas. Additionally, it could even help replace your salary if you can’t work overseas as you usually would. Having said that though, there might limits on how long you can keep claiming those benefits while you’re outside of Australia.
Further, getting a claim sorted may come with some extra steps, like getting medical reports and other supporting evidence translated into English.
If you’re curious whether a policy would cover you overseas – and how – you could always check the product disclosure statement (PDS) or speak with the insurer.
It may also be worthwhile remembering that while your life insurance could extend coverage to overseas, it won’t cover you if you have a medical emergency and need hospital treatment. So, you might want to get some travel insurance for that extra safety net while you’re abroad.
Will I need to provide medical information?
What information you’ll need to provide to buy a life insurance policy can differ between products and insurers. It’s not always necessary to provide medical information, like yours and your family’s medical history.
However, a policy that doesn’t ask for that kind of medical information could come with less policy benefits and features and narrower definitions about what they’ll cover. You might be comfortable with that or want to look for a more comprehensive policy.
Remember, though, if you’re asked to disclose medical information, you’ll need to answer honestly. If your insurer finds out you’ve misrepresented your circumstances, they could change the terms of your policy, deny a claim or end your policy.
Does life insurance cover pre-existing conditions?
For a life insurance policy, a pre-existing condition could be anything from asthma to heart disease. Since this definition is so broad, it’s fair to imagine quite a few people have gone before you, looking for cover despite their condition.
The good news, though, is it may be possible to get cover. This could come out in the wash in number of ways, like the insurer covering the condition (potentially for an increased premium, known as a loading) or tweaking the policy so that it excludes cover for your condition (known as an exclusion).
Alternatively, they may ask you for a bit more information to help make their decision. In some instances, there may even be an examination. This gives your insurer a better understanding of the severity of your condition, along with how well it can be managed.
All cards on the table, you may find that your insurer may choose not to cover you at all when you disclose your pre-existing condition. But that doesn’t mean you should keep it a secret. If you did need to claim because of it – or your insurer otherwise found out about it – your claim could be denied, or your policy completely cancelled.
How do I claim life insurance?
To get your claim started, you’ll need to know who to speak to. This’ll be who you bought your policy through, like the insurance company or your superannuation fund.
You or your beneficiary will need to let them know that you wish to make a claim, and they’ll be able to tell you what their process is, including what forms and information they need.
Depending on what type of life insurance you’re claiming for, this could be things like medical reports and tests, an explanation of your work duties including your weekly hours and any physical requirements, and your pay slips and tax returns.
Of course, by its very nature, your term life insurance policy will generally only be claimed on following your death. This means you’re loved ones will be making the claim during what is already a very difficult time so it’s worthwhile leaving clear instructions as to who to contact to make it as easy as possible for them. They will likely need to provide a death certificate or a medical report listing the cause of death.
Once your claim is submitted, it may take some time to learn the income. This could be as long as six months. If you urgently need financial help, you may be able to request for the process to be sped up, but you may need to provide supporting evidence for this need.
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iSelect’s partnered with Lifebroker (AFS Licence number: 400209) to help you compare a range of Life Insurance policies. iSelect earns a commission from Lifebroker for each customer referred through the website or contact centre. Lifebroker do not compare all life insurers or policies in the market.
iSelect Life Pty Ltd – ABN 89 124 304 347, AFS Licence Number 331128. Any advice provided by iSelect is of a general nature and does not take into account your objectives, financial situation or needs. You need to consider the appropriateness of any information or general advice iSelect gives you, having regard to your personal situation, before acting on iSelect’s advice or purchasing any policies. You should consider iSelect’s Financial Services Guide which provides information about iSelect services and your rights as a client of iSelect.’
^To understand what’s covered by a Life Insurance policy, please read the relevant Product Disclosure Statement (PDS).
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