Written by IN THIS GUIDE
Looking for the best life insurance policy?
Life insurance is an important safety net for your loved ones if you pass away, become seriously injured or sick or are permanently disabled. However, knowing which policy is the right one for you and your family can be tricky, with so many options to choose from on the market.
Savvy can help you compare life insurance quotes from a panel of some of Australia’s leading insurers. By considering your options with us, you can weigh up a wide range of factors, such as costs and benefits, before you purchase your policy. Start comparing and get a free quote through us today.
We’ve partnered with Compare Club to bring you a range of life insurance policies to help you compare them side by side.
Why compare life insurance through Savvy?
You can compare life insurance policies through us for free, allowing you to come back and continue comparing at any time.
By considering life insurance policies from insurers you can trust, you can be confident in the quality of the comparison process.
By filling out a simple online quote form, you can compare offers based on their coverage, cost and more before you buy.
What is life insurance and how does it work?
Life insurance is a type of insurance that can cover you or your family financially if the unexpected happens, such as sustaining a life-changing injury, being struck down with a severe illness or dying unexpectedly.
It can allow your family to have some financial independence after you pass away by making up for lost income, which can help them keep up with any outstanding debt repayments and pay off your medical costs. For example, your family may struggle to keep up with the mortgage repayments if you die suddenly, but with a life insurance payout, this could be more manageable for them.
The way it works is very similar to other forms of cover, such as health insurance or for your car or home and contents. When you take out your policy, you agree to pay a certain amount, known as a premium, every month or 12 months.
In exchange for this payment, your life insurance company agrees to pay out a specific sum (usually between $100,000 and $2 million), which will depend on the type of cover you have. You’ll be required to nominate a family or a loved one as the recipient of this money if something does happen, which is known as the beneficiary of your policy.
The types of life insurance
What factors affect the cost of my life insurance?
How to compare life insurance
Inclusions
Take a good look at some of the inclusions in your policy and compare them to ensure you’re getting the most out of what you’re paying. Life insurance policies can come with benefits such as cooling-off periods, worldwide cover and funeral advancement cover. On top of their list of covered events and illnesses, they'll also usually include inflation-proofing, which means the value of your cover will increase automatically in line with inflation.
Exclusions
Even the best policy won’t cover absolutely everything that happens in your life. As such, most life insurance companies have general exclusions they’ll detail both on their website and in their fine print. Some of these exclusions can include death by suicide (though this may be covered outside the first 13 months of your policy's coverage), criminal activity, alcohol or drug use, taking part in competitive sport or other risky activities such as paragliding and travelling into active conflict or a war zone. It pays to weigh these up when shopping around for a policy, as they may change between insurers.
Premiums
One of the top reasons to compare life insurance policies is to ensure you get the best price for your premium. By getting a few quotes and doing a side-by-side comparison with Savvy, you can increase your chances of finding the cheapest life insurance policy which also offers the coverage you and your family need.
Coverage limits
Whilst there are no limits to how much you could receive for life cover, there are maximum payouts for trauma ($2 million) and TPD ($3 million to $5 million). That’s why it pays to compare with Savvy so you can get the most bang for your buck, as it’s crucial to ensure that your family will be adequately covered if you pass away. Some families may not require as much coverage as others due to factors such as multiple incomes, superannuation and savings, so these are important to consider when deciding on which policy is right for you.
Benefits
There are more positives to life insurance than simply the lump sum you or your loved ones receive if you need to claim on your policy. Policies also offer other benefits such as advance payments, cover suspension and any discounts on your policy. Some insurers can also offer insurance that helps you pay your mortgage or the cost of caring for any dependents, such as ageing parents.
Waiting periods
When you purchase a life insurance policy, you may have to wait a certain period before you can make a claim. This is most often the case with income protection insurance, which may require you to select a timeframe varying from two weeks to two years after you sustain an injury or are diagnosed with an illness before a claim can be made, so it’s worth comparing these to find a waiting period that works best for you. Critical Illness and TPD cover may also have a 90-day wait period from when you take out the policy before you can claim.
How to choose the right life insurance policy
The pros and cons of life insurance
Common life insurance questions answered
Who receives my life insurance payout?
When you take out a life insurance policy, you get to name a beneficiary (or beneficiaries). By choosing a loved one, such as a spouse, partner or child as the intended recipient of your life insurance payout, your insurer will compensate them upon your death. You also have the option of naming your parents, business partners, friends, siblings or even a trust to manage your affairs after you’re gone.
Beneficiaries under the age of 18 in Australia aren’t legally allowed to receive funds in their name. Until then, the money would be managed by their trustee or legal guardian. No matter who you decide to name as your beneficiary, it is prudent to let them know. This is because, once the policyholder passes away, the claim must be submitted by a beneficiary, who will require the death certificate.
Does life insurance have a cooling-off period?
Your insurance provider likely has a cooling-off period, which is also sometimes called a grace period. During this period (typically between 14 and 30 days), you may choose to cancel your policy and get a full refund of premiums paid whilst it was in effect. Cancellations outside this period likely won’t come with full refunds, even if no claims have been made.
Is life insurance tax-deductible?
If you’ve purchased life insurance outside of your superannuation, your premiums generally aren’t tax-deductible. However, if you bought a policy through your super fund, what you pay may be tax-deductible. This will generally be claimed for you by your super fund. Income protection insurance is an exception to this, as its premiums can typically be claimed as a tax deduction whether inside or outside super. It’s important to consult with a financial professional if you’re unsure about what you can and can’t claim.
How many life insurance policies can I take out?
There’s no set limit on how many life insurance policies you can purchase. However, if you intend to make claims on multiple policies at the same time, you’ll need to ensure these are made within your insurers’ terms and conditions. For instance, you’ll have to disclose that you’ve received a payout for a particular event with one insurer when making a claim with another.
Will my life insurance offer coverage if I die of COVID-19?
Almost all life insurance providers will offer coverage for death or critical illness as a result of COVID-19. There generally aren’t any specific exclusions relating to the pandemic applied to life insurance policies, which include those relating to the vaccine or your vaccination status (which you aren’t required to disclose). However, if you’ve tested positive for COVID-19 and are yet to recover fully or are experiencing symptoms without having been tested or receiving a result, you won’t be able to purchase a policy. You should always check with your insurer if you’re unsure about what is and isn’t covered in relation to COVID-19.
Can I withdraw money from my life insurance?
No – life insurance payouts will only be paid out if you or your beneficiary make a claim, so you or your family won't be able to draw any money from your policy prior to making a claim.
Can I get life insurance for my children?
Yes – some life insurance companies offer specialist protection for children. Designed to lessen the financial burden on families, child life insurance can provide a lump sum payout in the event of your child’s death, terminal disease diagnosis or certain medical procedures. Brain damage, cancer, paralysis, burns, blindness and deafness are all instances of serious injuries and diseases which can be covered by these insurance policies.
Does life insurance cover me if I travel overseas?
Yes – if you’re living in Australia, your life insurance policy can cover you while you’re on your international holiday. However, you still need to follow Australian government directives, as you won’t be covered if you willingly travel to a country that’s under a ‘do not travel’ warning.
Helpful guides on life insurance
COMPARE LIFE INSURANCE TODAY
Disclaimer:
Savvy is partnered with Compare Club Australia Pty Ltd (AFS representative number 001279036) of Alternative Media Pty Ltd (AFS License number 486326) to provide readers with a variety of life insurance policies to compare. Savvy earns a commission from Compare Club each time a customer buys a life insurance policy via our website. We don’t arrange for products to be purchased from these brands directly, as all purchases are conducted via Compare Club.
Savvy does not compare all life insurance policies or providers currently operating in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.
For any further information on the variety of insurers compared by Compare Club or how their business works, you can read their Financial Services Guide.
