Life insurance provides a financial safety net for your loved ones if life events mean you are unable to provide for them. Depending on the policy you choose, your beneficiaries could receive a payout ranging from $100,000 to $2 million or more to help cover immediate and ongoing expenses when you no longer can.
However, with so many options on the market, finding the right life insurance policy can be tricky. Savvy can help you compare quotes from some of Australia’s top insurers, helping you find the right plan for your needs and budget. Get a free quote through us today.
What is life insurance?
Life insurance is a policy that pays a lump-sum benefit if you are diagnosed with a serious illness, suffer a major injury, become permanently disabled or pass away.
The payout is provided as cash, so it can be used to cover a range of costs as needed, such as everyday bills, mortgage repayments, medical costs, home modifications, funeral expenses or anything else you or your family may need.
To maintain your cover, you pay regular premiums to your insurer. These are priced in two main ways:
- Variable age-stepped premiums are based on your current age and tend to start lower but increase annually. They may also rise if your insurer changes premium rates for the group of customers your policy is in or if you adjust your level of cover.
- Variable premiums (formerly called level premiums) are based on your age when you first take out the policy. These usually start higher but stay stable throughout the policy, helping you avoid sharp year-on-year increases. However, most policies switch to age-based pricing around age 65, which can lead to steeper premium increases later in life.
You can generally take out life insurance in your own name from around 16 to 19 years old up to a maximum entry age between 55 and 74, depending on the type of cover you choose and your insurer. Cover itself expires at a set age: trauma, TPD and income protection policies typically end between ages 70 and 75, while term life cover often lasts until age 99.
Types of Life Insurance
Standalone vs linked life insurance policies
When choosing life insurance, you’ll have the option to take out one or more types of cover as standalone policies or may be able to link them together under one package.
Standalone policies
These are taken out separately, meaning each type of insurance has its own cover amount and won’t impact the others if you make a claim. This gives you more flexibility to adjust or cancel individual policies and ensures that one claim doesn’t reduce your overall coverage. However, standalone policies usually cost more overall than bundled options and can be more complicated to manage, as you’ll need to keep track of multiple policies and payments.
Linked policies
These policies combine different types of lump-sum life insurance – in other words, term life, TPD and trauma – into a bundled package. This can reduce your total premium compared to paying for each one separately and makes managing your cover easier. The downside is that a claim on one policy (such as TPD or trauma) will typically reduce the remaining benefit on your life cover.
To help manage this, some insurers offer a ‘buy-back’ option, which allows you to restore your life cover after a claim. This can come with extra costs and conditions – for example, you may not be covered for the same illness again, such as a recurring cancer diagnosis.
Keep in mind that you will typically only be able to link lump sum policies, such as bundling two or more of life, TPD and trauma cover. However, income protection cover, which pays a monthly benefit rather than a lump sum, generally must be held as a standalone policy.
How much does life insurance cost?
Some of the biggest factors that affect your life insurance premiums are your age, gender and the amount of cover you choose. Generally, premiums increase as you get older, reflecting the higher risk to the insurer. Premiums also tend to be higher for men than women due to differences in life expectancy and health trends. And naturally, the more cover you take out, the higher your premiums will be.
Here’s how these factors can impact your monthly premiums:
| Age | Gender | $100,000 cover | $500,000 cover | $1,000,000 cover | $2,000,000 cover |
|---|---|---|---|---|---|
| 25 | Female | $4 | $13 | $20 | $39 |
| Male | $6 | $18 | $32 | $63 | |
| 35 | Female | $4 | $13 | $20 | $40 |
| Male | $5 | $14 | $25 | $50 | |
| 45 | Female | $5 | $20 | $37 | $68 |
| Male | $8 | $23 | $41 | $81 | |
| 55 | Female | $25 | $64 | $114 | $213 |
| Male | $30 | $82 | $147 | $291 | |
| 65 | Female | $114 | $262 | $466 | $869 |
| Male | $156 | $389 | $690 | $1,288 | |
| Source: Compare Club, November 2025 Quotes shown are the lowest available for each scenario. Quotes are based on an adult living in South Australia who is a non-smoker and works in a professional role. Amounts are rounded to the nearest dollar. |
|||||
Other factors that can affect your life insurance premiums
- Smoking: being a smoker (including vaping, chewing tobacco and using nicotine replacement products) can more than double the cost of your life insurance policy because of the higher risk of disease. For example, a 35-year-old male smoker would pay from $36 a month for a $500,000 life insurance policy – around $22 more than a non-smoker of the same age and gender.
- Your occupation: some occupations, such as law enforcement, firefighting and flying aircraft, are seen as more dangerous than others, which can lead to higher premiums. For example, a 45-year-old female pilot taking out a $1 million policy might pay from $38 per month – over $18 more per year than a 45-year-old woman in a professional role paying the cheapest available premium. Depending on the insurer and exact role, the premium difference could be even greater.
- Your medical history: insurers will want to know about any pre-existing conditions as well as considering factors like your weight and blood pressure. Premiums may also be affected by your family medical history, such as cancers and haemophilia, which can indicate a higher risk of future health issues.
- Lifestyle: high-risk activities like rock climbing, scuba diving or motorbike racing can increase your premium due to the increased risk of injury or accident.
- Optional extras: adding ‘policy riders’ like child cover, accidental death benefits or rehabilitation support can offer more protection but will usually increase your premiums.
How much life insurance do I need?
The amount of life insurance you need depends on your personal and financial situation. It’s important to assess your circumstances to determine the right level of cover — what you’d want to leave behind if you were to pass away.
This might include paying off any debts, such as your mortgage or other housing costs, covering education expenses for your children and providing financial support to your partner. You should also consider any savings, investments or assets that could help fill the gap.
Using a life insurance calculator can be a helpful way to estimate the right amount of cover based on your specific needs and goals.
Can I get cheap life insurance?
If you're looking to save on life insurance, there are ways to cut costs without compromising on cover.
- Check if you’re covered by your super: many superannuation accounts include default life cover. Reviewing what’s included can help you avoid paying twice for similar protection, saving you money.
- Choose the right amount of cover: don’t choose more cover than you need, as this can lead to paying for unnecessary protection. At the same time, opting for too little cover might save money upfront but won’t provide enough support when it matters most. Finding the right balance between affordability and adequate coverage is essential to ensure your family is properly supported if something happens.
- Compare quotes from multiple insurers: prices can vary significantly for the same type of policy. Even if you already have life insurance, it’s a good idea to review it from time to time to make sure you’re not paying more than you need. You may also be able to take advantage of discounts and promotional offers when signing up for a new policy.
Why compare life insurance through Savvy?
Life insurance policy vs superannuation cover
Many superannuation funds include life insurance cover for their members automatically, though you can choose to cancel it if you wish. But how does this compare to taking out a standalone life insurance policy? Here’s a breakdown of the key differences to help you understand your options:
| Insurance through super | Standalone life insurance | |
|---|---|---|
| How it's paid | Deducted from your super balance | Paid from your bank account or credit card |
| Types of cover | Usually includes term life, TPD and income protection | Choose from term life, TPD, trauma or income protection |
| Customisation | Limited to what's offered by the fund | You can tailor your cover to suit your needs |
| Eligibility | May be restricted if under 25 or balance under $6,000 | Available to most Australians (subject to approval) |
| When cover ends | TPD at 65, life at 70 or if the account is inactive for 16+ months | Cover lasts as long as you pay premiums, up to a certain age |
| Impact on super | Reduces your retirement savings | No effect on your super balance |
| Cost | Often cheaper due to group pricing | Premiums can be higher |
| Claim payouts | May take longer and be subject to super rules | Usually faster and paid directly to beneficiaries |
| Policy control | Limited – terms can change without your input | Full control over features and provider |
Which option is better depends on your personal circumstances and how much control you want over your cover.
- If you have specific needs or want the flexibility to tailor your policy, a standalone policy may be the better choice.
- If you're comfortable with a more general level of protection and prefer the convenience of automatic deductions, insurance through your superannuation could suit you. It also offers a solution if you’re a higher-risk applicant who would otherwise struggle to get cover.
There’s also nothing stopping you from having a mix of both – but take care not to double up on cover unnecessarily.
How to compare life insurance quotes
-
Weigh up premiums
Premiums can differ significantly between providers, so it’s a good idea to get multiple quotes to ensure you're not overpaying for the same level of cover.
-
Look at what’s included
Check what the policy includes as standard protection, such as funeral advance payments, worldwide cover, inflation protection and cooling-off periods. These essential features vary between insurers, so it’s important to know what you’re getting as a baseline.
-
Understand exclusions
Every policy will have exclusions, such as death by suicide within the first 13 months, injury or death during illegal activity, substance use, or participation in risky sports or travel to war zones. Read the fine print carefully to understand what isn’t covered and whether it aligns with your lifestyle.
-
Check coverage limits
While some insurance providers offer unlimited term life cover, others have much lower limits – and trauma and TPD policies generally have much lower caps. Consider how much coverage your family would realistically need and compare accordingly.
-
Explore additional benefits
Look for additional features that can add value beyond the basics, like mortgage assistance, dependant care benefits or discounts for healthy lifestyles. These extras might make a big difference if your family relies heavily on your income.
-
Consider waiting periods
While term life insurance usually has no waiting period, income protection and critical illness cover often require a waiting period before you can make a claim. These typically range from one to three months, but some insurers may offer shorter or longer options, so it’s important to compare them carefully to find a policy that suits your needs.
Life insurance pros and cons
Pros
-
Protection for your loved ones
The most significant benefit of life insurance is the peace of mind it gives your nearest and dearest if something happens to you and you can no longer provide for your family.
-
Can clear your debts
If the unexpected happens and you’re unable to earn a regular income, your life insurance can cover the payments on your mortgage and other debts.
-
Certain payouts are tax-free
In Australia, life insurance payouts are often made tax-free to dependants. However, those receiving your payout who aren’t financial dependants could be taxed heavily.
Cons
-
Can be costly
Life insurance can cost hundreds of dollars every month, putting a dent in your budget when you may not make a claim for many years – or at all.
-
Potentially complex claims process
Claims on life insurance policies can be complicated and time-consuming. For instance, if there’s uncertainty about whether the event is claimable, payment will be delayed.
-
You may not qualify
To qualify for life insurance, you may be required to pass a medical exam or meet certain health and lifestyle criteria. If you don’t, you could face higher premiums or be declined coverage.
What happens if I cancel my life insurance policy?
Your life insurance coverage only applies while your premiums are being paid. If you cancel your policy, your protection ends immediately and you won’t be able to make a claim for any conditions or events that happen after cancellation or get a refund.
Life insurance isn’t a savings account and paying premiums doesn’t build cash value you can get back. This means your beneficiaries won’t receive a payout once you cancel your coverage, even if you paid premiums for years prior to doing so.
In addition, if you cancel and then decide to get life insurance again later, you may face higher premiums or have to go through new waiting periods before coverage kicks in.
