Family Life Insurance

Family life insurance in itself isn’t a product you can buy in Australia, with policies typically tailored to the needs of a single policyholder. However, there are policies that you may be able to purchase which can be more tailored to the needs of a family. For instance, some insurers may offer the ability to buy a joint policy for you and your partner, while others can enable you to add protection for your children in the form of an optional policy rider.

It’s important to take the time to consider the vast range of options available while shopping around for a policy for your collective needs. You can do just that through Savvy.

We’ve partnered with Compare Club to bring you a range of life insurance policies to help you compare them side by side.

What types of life insurance can I purchase for the whole family?

Generally speaking, you’ll have a few options to choose from if you’re looking for a life insurance policy to offer cover or financial security for your family. These will usually include:

• Term life insurance: also known as life cover, this type of policy can cover you for between ten to 30 years and enables your beneficiaries to receive a lump sum of money if you pass away due to a covered event or are diagnosed with a covered terminal illness. In most cases, coverage starts at $100,000 and can increase from there, taking into account affordability and what your family requires after your death.
• Trauma insurance: if you become seriously ill or suffer a serious injury, trauma insurance can help you and your loved ones cover the costs of your recovery and other expenses with a lump sum payment. Covered injuries and illnesses will depend on your insurer, but some may include cancer, heart disease or severe head trauma. Trauma insurance can reach up to $2 million worth of coverage.
• Income protection insurance: being unable to receive a regular income due to illness or injury can place a strain on a family’s finances. Income protection insurance can cover you for up to 70% of your regular wages on an ongoing basis (subject to your insurer’s terms and conditions) to help your family stay on top of important payments such as rent, a mortgage and school until you’re well enough to get back to work.
• Total and permanent disability (TPD) insurance: this type of cover can pay out a lump sum if you become permanently disabled and are unable to return to work. This is either in the form of Own Occupation cover (unable to return to your current position, but able to continue working in a similar role) or Any Occupation cover (unable to return to any position relevant to your experience, education and training). You may be able to insure yourself for as much as $3 million to $5 million.

What should I consider when taking out family life insurance in Australia?

It’s best to consider a range of factors before comparing life insurance deals through Savvy. Some of the areas to consider include:

Your family’s needs

Work out how much your family would need to live on if you or your partner were to pass away or become incapacitated and leave the household without that person’s income. Make sure you consider things such as outstanding debt, ongoing costs such as childcare and schooling, any savings or superannuation you have which can be drawn upon and the cost of a funeral if someone were to pass away. This can help you avoid over-insuring yourself and your family and paying more than you need to for coverage.

Benefit limits

Different life insurance policies come with varying maximum benefit limits, so comparing through Savvy can help you find a suitable option for your family from our selection of insurance partners. It’s important to look for a policy with an insurer who can provide you the most appropriate protection available to you and your loved ones.

What’s included and what isn’t

Reading through your life insurance policy’s Product Disclosure Statement (PDS) allows you to understand the policy’s inclusions and exclusions. Some of the features regularly included in policies include inflation-proofing, overseas coverage and advance payments. However, they can differ between providers, which is why it pays to compare. On the other hand, insurers usually have general exclusions including alcohol or drug-related claims, suicide within the first 13 months of the policy and travel to dangerous countries, which are worth knowing about before buying your policy.

How many children are covered

It can be important to find out how many children can be covered under policies if you’re thinking of growing your family. Looking for a policy that gives you some breathing room to add more children on as they arrive can give you peace of mind your clan can be covered, no matter how many of you there are. Some life insurance providers may allow you to add up to ten children to your policy for an added premium.

Type of premium

You’ll want to consider whether the price of your premium is stepped or level, as this will play a role in determining how much you pay over the life of your policy. Stepped premiums increase as you grow older, starting out cheaper and becoming more expensive as you age, while level premiums remain consistent throughout your policy and only rise with inflation. This means that while stepped premiums are often the more affordable option when you’re younger, level premiums typically work out to be cheaper when you’re older.  

Pre-existing medical conditions

If you have a pre-existing medical condition, it’s important to look for policies which may be able to cover it. Rules around pre-existing conditions vary depending on who you buy with and the nature of your condition, so it’s worth checking out before you buy. Some providers may offer cover for a higher premium, while others may not cover the condition at all.

Types of life insurance

Term life cover

Life cover can pay a nominated beneficiary a lump sum if you’re diagnosed with a terminal illness or pass away. It can provide your immediate family or another loved one some financial assistance to cover funerals, medical costs and day-to-day expenses.

Income protection cover

If you’re injured or too sick to work for an extended period, income protection insurance is designed to cover you. Up to 70% of your usual wage can be covered for a chosen period, such as five years or up to age 65, depending on the level of coverage you buy.

Total & permanent disability (TPD) cover

This type of insurance is designed to offer cover to those who are permanently disabled by injury or illness and are no longer able to work. You can choose to take out cover for an inability to work in your current job or in any role suited to your qualifications.

Trauma cover

Trauma insurance provides you with a lump sum in the event of a critical illness or major accident. The conditions eligible for claims will be outlined in your insurer's PDS, but can include cancer, heart disease, severe head trauma and cardiovascular disorders.