Life Insurance Comparison

If you’re in the process of getting life insurance quotes, it’s important you don’t allow yourself to feel pressured into making a quick decision. Before you select a life insurance policy, you should fully understand the product you’re purchasing, and take the time to consider your options. You should always read the product disclosure statement (PDS) of the life insurance products you’re reviewing. This document will contain all of the important information about your product, and will allow you to better determine whether it’s suitable for your needs. The Australian government recommends considering the following when comparing policies:

• The type of life insurance cover: Are your quotes for income protection, total and permanent disability (TPD) cover or another type of life insurance?
• The level of cover: How much will your provider pay should you or your family need to make a claim?
• The inclusions and exclusions: What events or illnesses are covered by the life insurance policy? What’s not included? Is it likely to affect you?
• Your medical history: Do you have any pre-existing medical conditions that may not be covered, or may increase the cost of the life insurance quotes?
• The ongoing cost of cover: Will the premiums stay the same each year, or will they increase depending on your age? Can you afford the insurance in the long term?
• The shortcuts: It might initially seem convenient not having to hand over any medical details to get covered, but it can also lead to inconvenience further down the line. Find out whether these shortcuts increase the cost of your premiums, or whether they have more exclusions that may affect you in the future.

Ultimately, if you’re uncertain about anything, you should ask your advisor directly. By considering all of the available information, you’ll be able to make an informed decision about your life insurance quotes.

Life insurance is a type of insurance that’s designed to provide you and your family with financial peace of mind. If something were to happen to you, your family would likely be covered for some of life’s major expenses, whether that includes significant medical expenses or modifications to your home due to a disability, or potentially even funeral arrangements. When you or your nominated beneficiary make a claim, a lump sum payment may be provided to your family. This could be in the event of your death or upon being diagnosed with a terminal illness. A life insurance policy is a document that outlines the benefits of your life insurance. It covers the amount you may receive upon making a claim, and under what circumstances you can make a claim, as well as any exclusions or relevant specifics, including the details of your beneficiaries. It should also cover whether you have stepped or level premiums (that is, whether your payments increase each year in line with CPI indexation and as you age, or whether they only increase by CPI indexation). Your life insurance policy is usually provided by either a bank, or superannuation fund. It can include multiple types of cover depending on your circumstances. Some of these include:

• Life Cover
• Income protection
• Total and Permanent Disability (TPD) cover
• Trauma insurance

Before you sign up for life insurance, it’s important that you understand all the ins-and-outs of the policy. You can do this by reviewing your policy’s Product Disclosure Statement (PDS), which outlines all the details of the policy. With iSelect you can compare life insurance policies from our range of providers to find a policy of your choice. Start comparing online today, or call our friendly team on 13 19 20.

Unfortunately there is no “best” or “one-size-fits-all” policy. Finding a policy that works for you depends on a range of factors, including your needs, budget, personal circumstances, and your lifestyle. When searching for a suitable policy, the Australian government recommends asking yourself some questions, which include:

• How much money do you need to pay your rent or mortgage?
• Do you have any other debts?
• Do you need to consider child care, education and other living expenses?
• How much money will you receive from your superannuation, shares, savings and existing insurance policies?
• How much paid leave do you have at work?
• What type of support could your family provide?

Once you’ve answered these questions, you’ll be able to better determine roughly how much money you or your family would need to be financially stable. You may also want to consider additional questions, such as whether you have any medical conditions that may affect any claims, or whether you already have some cover through your superannuation fund.

When it comes to insurance, the cheapest option in terms of monthly premiums may not always be the cheapest option further down the track. This is because there’s often additional fees, limits and conditions to take into consideration when choosing an insurance policy, and life insurance is no exception. If you’re in the market for a new life insurance policy, the Australian government recommends some factors to consider when comparing policies, which include:

• Your expenses: Do you have to pay a mortgage or rent? Do you have car loans or any other expenses that you or your family would be unable to pay should something to happen to you?
• Your savings: Whether this is in the form of investments or a savings account, do you have money that you or your family could use as financial support?
• Your income: Do you have any annual leave accrued that would be paid out? What about your superannuation balance?
• Your health: Are you generally fit and healthy? Do you have any pre-existing medical conditions, or medical history that may affect your policy?
• Your age: Some life insurance policies increase with age and CPI indexation, known as stepped premiums. Others have level premiums that only increase by CPI indexation and not because of your age, although these are typically more expensive from the get-go.
• Your family: Do you have children? Do you have extended family members who may be able to help or support you, or your family after you’ve gone?

All of these considerations play a role in determining what type of life insurance policy you may decide to choose. Once you know where you stand, you can decide whether the provider with the cheapest premium is appropriate for you, or whether you need something with more cover and inclusions.

When you’re looking to buy life insurance, it may be worthwhile to compare policies and ensure you’re getting a good deal. By having a few different policies to consider, you can enjoy peace of mind that you’re making an informed decision. With iSelect you can easily compare life insurance policies from our range of providers, and select a policy of your choice. When comparing online, you can review products on offer from our providers, as well as monthly premiums, and features and inclusions. If you have any questions, you can call our friendly team of advisors on 13 19 20, and they’ll be able to answer any of your questions. Additionally, here’s some recommendations from the Australian government¹ that may assist you when comparing life insurance policies with iSelect:

• Type of cover: There’s a few different types of life insurance cover, so make sure what you’re getting is relevant and beneficial to your circumstances.
• Level of cover: How much could you or your family be paid if something happens to you? Is it enough to cover any ongoing expenses your family may have?
• Waiting periods: Do any waiting periods apply to different types of benefits?
• Type of premium: There are two options for premiums in life insurance. These are known as stepped and level premiums. Stepped premiums increase as you get older and with CPI indexation, while level premiums only increase by CPI indexation and not because of your age, although are often more expensive to begin with.
• Inclusions and exclusions: What’s covered by the policy and what isn’t? Are there exclusions that are likely to impact your family’s ability to make a claim? Do you have any medical conditions that may be excluded?
• Shortcuts to cover: Does the policy require you to provide medical information or can they cover you without any documents? While it may seem convenient at the time, it could be more difficult for you to make a claim in the future, or it could lead to more expensive premiums.

Source: https://www.moneysmart.gov.au/insurance/life-insurance/income-protection

How much life insurance costs can depend on a number of different factors, including your age, your overall health, and your general lifestyle. In addition to this, the same degree of cover can vary in cost between different providers. The following factors may impact the cost of your monthly premium:

• Your level of coverage: Do you need income protection, total and permanent disability coverage, funeral cover or something else? How much needs to be paid out to cover you?
• Your age: As you age, you’re generally more likely to make a claim. To offset some of the risk, some providers use stepped premiums that increase as you age and by CPI indexation, while others simply calculate an overall level cost.
• Your occupation: If your job puts you in dangerous situations, such as mining or construction, the cost of your insurance could typically be higher than someone working in an office.
• Your lifestyle: Providers may consider how much alcohol you drink, whether you smoke, as well as whether you play any high-risk sports or hobbies.
• 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), this may increase the cost of your life insurance.

Life insurance is often provided by either a financial institution, such as a bank or a superannuation fund. There are many different companies in Australia who offer products relating to life insurance, some covering income protection, others covering total and permanent disability insurance or funeral cover. There are also a number of providers who can offer the full suite of life insurance products. At iSelect, we’ve partnered with a range of life insurance providers to help you select a policy of your choice. These providers are:

• AIA: A leading life insurance provider, AIA offer a comprehensive range of products that protect the financial health and welfare of more than four million Australians.
• CommInsure: A service provided by the Commonwealth Bank of Australia, CommInsure offers life insurance and other products to Australians nationwide.
• TAL: With over 140 years’ experience, and trusted by almost four million Australians, TAL allow you to claim with confidence. In 2018, they paid almost $1.62 billion in claims.
• Zurich: A global insurer providing a wide range of life cover and other insurance products in more than 210 countries and territories.
• MLC: A superannuation provider for over 130 years, MLC fund members are able to take advantage of their life insurance products.
• NEOS: Created to significantly improve the way life insurance is delivered in Australia, NEOS purports to offer fairer, more stable pricing and faster decisions than other providers.
• OnePath: OnePath provides insurance, superannuation, and investment solutions to Australians. With over 140 years’ experience, they’re dedicated to helping Australians grow and protect their wealth.

 

Just like other types of insurance, life insurance charges you an ongoing premium. This can be paid annually or in fortnightly or monthly installments depending on what suits your needs. Unlike other types of insurance, your life insurance level of cover can increase by CPI indexation as you get older. This is because the older you get, the more likely you are to make a claim. Providers who offer life insurance, including total and permanent disability or trauma cover, may give you the option to choose between stepped or level premiums.

• Stepped Premiums: Your insurance premium calculation is weighted strongly on your age. Generally the younger you are, the less you have to pay, although this could increase by hundreds of dollars in just the first few years due to your age and also CPI indexation on your policy. If you’re considering stepped premiums, it’s important you understand the increasing costs over time and consider how long you intend to hold the policy for.
• Level Premiums: Under this option, your insurance premium isn’t weighted as heavily towards your age. However, it’s also typically more expensive initially than a stepped premium and may increase over time due to inflation or changes to your provider’s fees. If you’re choosing a level premium, this may be because you intend to hold the policy for an extended period of time.

There are several other factors that come into play when calculating life insurance premiums. These include the following:

• Occupation: Is your job considered high-risk?
• Gender: Different genders are statistically more likely to make claims on different types of life insurance. This plays a part in the cost of your premium.
• Lifestyle: Do you drink or smoke? Do you play high-impact sports or have extreme hobbies?
• Medical history: Do you have any pre-existing medical conditions, or a family history of different conditions? This could include cancer, diabetes, high blood pressure, as well as some autoimmune conditions.

Before purchasing a policy, make sure you read carefully the relevant Product Disclosure Statement (PDS), which outlines all the details of the policy.

There are a variety of different products that fall under the life insurance umbrella. These include the following:

• Life Cover:
  • Also known as ‘term life insurance’ or ‘death cover’, life cover is a policy that pays a set lump sum amount of money when you pass away. The money is distributed to your nominated beneficiaries, such as your spouse and/or children. If you haven’t named anyone on your policy, then your estate will decide where the money goes.
  • This type is cover is considered ‘guaranteed renewable’, which means you’ll generally only stop being covered if you stop paying for it, or if you reach a certain age that is excluded under your policy. Even if you suffer an illness or injury that would prevent you from taking out life cover, the cover will generally continue.
• Income Protection:
  • Also known as ‘salary continuance’, income protection is designed to help you and your family members manage your expenses if you’re unable to work for a certain period of time. This could be a result of illness or injury, or in some cases, due to (that is, if you purchase redundancy insurance as an optional add-on)
  • While almost anyone who is a full-time employee can take out income protection, the Australian government suggests that it’s particularly suitable for self-employed people, small business owners or professionals whose business relies heavily on their ability to work.
• Trauma Cover:
  • Also known as ‘critical illness’ cover or ‘recovery’ insurance, trauma cover can provide cover when you’ve suffered a serious illness that makes it impossible for you to continue work. It can provide you with financial stability, making it easier for you to continue to support your family.
  • Your policy will specify illnesses that trauma cover will provide for, such as cancer or a stroke. Making a claim provides you with a set amount, which you can use to pay for things like:
    • Medical costs above your health insurance
    • An income stream if you stop working
    • The ongoing cost of any special transport
    • Adjustments to housing
    • Paying off your debts
  • Be sure to read the Product Disclosure Statement to check what specific illnesses are covered and the set amounts that may be paid out.
• Total & Permanent Disability Cover (TPD):
  • This insurance provides cover if you’re totally and permanently disabled and unlikely to ever be able to work again. It can help to cover the cost of rehabilitation, debt repayments and the future cost of living.
  • When selecting a provider for this cover, it’s always recommended that you review the Product Disclosure Statement (PDS). Different providers may define total and permanent disability either as when you can’t work again in any occupation, or when you can’t work again in your usual occupation – a significant distinction.

According to the Australian Tax Office (ATO), you can claim the cost of your insurance premiums against the loss of your income. However, there are limitations. If you have a policy that provides benefits for your income, as well as other capital, you can only claim for the part of the premium attributed to your income. You must also include any payment you receive under such a policy on your tax return. Additionally, you can’t claim a deduction for a premium where the policy is taken out through your superannuation, and where insurance premiums are paid via your super contributions. You also can’t claim a deduction for a policy that compensates you for physical injury, such as:

• Life cover premiums
• Trauma insurance premiums
• Critical care insurance premiums

In summary, the only type of life insurance premium that is generally tax deductible is income protection, and only when you’re paying for it through your standard income, and not your superannuation.