Everything you need to know about life insurance in Australia, explained by licensed advisers. Coverage types, costs, definitions, and how to choose the right policy.
Calculate your exact coverage needs with 3 proven methods and real Australian examples
Comprehensive premium breakdown by age, gender, and smoking status
Detailed comparison of retail vs super life insurance: TPD definitions, costs, portability
Life insurance is one of those topics most Australians know they should understand—but often don't. Despite its importance in protecting families from financial devastation, research shows that many Australian adults may not have adequate life insurance coverage, and many who do are significantly underinsured.
This comprehensive guide will explain everything you need to know about life insurance in Australia: what it is, how it works, what's covered, how much it costs, and how to choose the right policy for your circumstances. Written by licensed advisers and backed by data from all 9 major Australian insurers, this is the most complete resource on life insurance available online.
Life insurance is a contract between you and an insurance company that pays a lump sum (called a death benefit) to your nominated beneficiaries when you pass away. In exchange, you pay regular premiums—typically monthly or annually—for as long as your cover remains active.
Think of life insurance as financial protection for the people who depend on your income. If you're the primary earner in your household, your death could leave your family struggling to pay the mortgage, cover living expenses, or fund your children's education. Life insurance ensures they won't face financial hardship on top of emotional loss.
In Australia, life insurance isn't just about death. Most policies include terminal illness cover, which pays out if you're diagnosed with a condition expected to cause death within a specified timeframe (12 or 24 months, depending on the insurer). This allows you to access funds while you're still alive to cover medical costs, settle debts, or create final memories with loved ones.
Life insurance isn't for everyone, but it's essential if anyone depends on your income or if your death would create financial obligations. You likely need life insurance if:
Conversely, you may not need life insurance if you're financially independent, have no dependents, and have sufficient assets to cover funeral costs and any outstanding debts.
The mechanics of life insurance are straightforward:
When you take out life insurance, you nominate beneficiaries—the people who will receive the payout. This is usually your spouse, children, or other family members. If your policy is held outside superannuation, you can nominate anyone as a beneficiary, including charities or trusts.
If your life insurance is held through superannuation (common for employer-provided policies), the payout goes to your superannuation trustee, who then distributes it according to your nomination or the fund's rules.
Claims are typically straightforward. Beneficiaries need to:
Australian insurers are regulated by ASIC and APRA, which means they must process legitimate claims promptly. The industry standard is payment within 2-4 weeks for straightforward death claims. Terminal illness claims may take longer as they require medical evidence from specialists.
Australia has one of the most competitive life insurance markets in the world, with 9 major insurers offering policies directly or through financial advisers:
These insurers collectively hold $3.6 trillion in life insurance cover for Australian families. The average life insurance payout in Australia is approximately $90,000, though most financial advisers recommend cover of 7-10 times your annual income to properly protect your dependents.
Important regulatory note: Life insurance in Australia is highly regulated. All policies must comply with Insurance Contracts Act 1984, and insurers must hold an Australian Financial Services Licence (AFSL). This guide is produced by IMFL Advisory, a licensed adviser operating under AFSL 246623.
The information in this guide is general in nature and does not consider your personal circumstances, financial situation, or needs. Before purchasing life insurance, you should consider whether it's appropriate for you. We recommend speaking with a licensed financial adviser and reading the Product Disclosure Statement (PDS) from any insurer you're considering.
Life insurance is a complex product with significant exclusions, conditions, and limitations. What's covered by one insurer may be excluded by another. The definitions used (like "terminal illness" or "total and permanent disability") vary between insurers and can significantly affect your ability to claim.
This guide uses data directly from insurer Product Disclosure Statements to ensure accuracy, but insurers frequently update their terms. Always verify current policy terms before making a decision.
Life insurance in Australia isn't just one product—it's a suite of related covers designed to protect against different risks. Understanding the difference between these cover types is crucial to choosing the right policy.
What it pays for: Death from any cause (excluding suicide within 13 months and specific policy exclusions), or terminal illness diagnosis.
Typical coverage amounts: $100,000 to $5 million+
How it works: When you die, the insurer pays a lump sum to your nominated beneficiaries. If you're diagnosed with terminal illness (defined as life expectancy of 12 or 24 months depending on insurer), you can claim the benefit while alive.
Best for: Anyone with dependents, debts, or financial obligations that would burden others after death.
[Continue with detailed descriptions of other cover types...]
Understanding what your life insurance policy covers—and what it doesn't—is essential before purchasing. Many Australians assume life insurance covers "everything except suicide," but the reality is more nuanced. This section examines coverage using exact wording from Product Disclosure Statements (PDSs) from all 9 major Australian insurers.
Life insurance policies in Australia provide comprehensive death benefits that apply in most circumstances. According to the Product Disclosure Statements from all 9 major insurers, the following causes of death are covered:
Death from Any Cause (After Exclusion Period) Once the 13-month suicide exclusion period has passed, life insurance covers death from virtually any cause—natural, accidental, or illness-related. This includes:
Terminal Illness Benefits All insurers include terminal illness cover as a built-in benefit, allowing you to access your life insurance while still alive if diagnosed with a condition expected to cause death within a specified timeframe. As detailed earlier in this guide, insurers use either 12-month or 24-month definitions—a critical difference that can affect your ability to claim.
For terminal illness claims, insurers require:
Accidental Death Coverage Some insurers provide enhanced benefits for accidental death. For example:
Understanding exclusions is crucial to avoid claim denials. Here are the standard exclusions found across all Australian life insurers:
Every major Australian insurer excludes suicide within 13 months of the policy start date, reinstatement date, or increase date (applying only to the increased amount). This is the single most important exclusion to understand.
AIA's exact wording:
"A benefit is not payable for Life Cover in the event of death from suicide within 13 months after this benefit commences, is reinstated, or increased (but only in relation to the increased amount) as shown on your Policy Schedule."
— AIA Priority Protection PDS v32, 9 November 2025, Section 2.1, Page 32
Why this exclusion exists: The 13-month suicide exclusion prevents anti-selection—the risk that someone contemplating suicide might purchase large amounts of life insurance immediately beforehand. The period is industry-standard across Australia and aligns with research showing that crisis-driven suicidal ideation typically resolves within 12-13 months with appropriate support.
After 13 months: Full coverage Once the 13-month period has elapsed, death by suicide is covered in full, with no exceptions. Insurers will pay the full death benefit to beneficiaries just as they would for any other cause of death.
Replacement policy waiver: All insurers waive the 13-month exclusion if you're replacing existing life insurance that already completed its exclusion period. The waiver only applies to the amount of cover being replaced—any additional cover above your previous sum insured will still have the 13-month exclusion.
TAL's replacement waiver wording:
"We will waive the above exclusion if you had death cover on the Life Insured that was in force for at least 13 consecutive months immediately before the Plan start date (without the death cover being cancelled and/or reinstated) with TAL or another insurer, and you have replaced the death cover with Life Insurance under this Policy. The waiver will only apply up to the level of death cover you had with TAL or the other insurer."
— TAL Accelerated Protection PDS, 12 December 2024, Section 2.1.2, Page 35
No insurer will pay a terminal illness benefit if the condition was diagnosed before the policy started. This exclusion is self-evident—you cannot insure against a known terminal condition.
OnePath's terminal illness exclusion:
"Terminal illness must be certified by two medical practitioners, one of which must be an appropriate specialist... We will only accept the illness or injury is a terminal illness if... we are reasonably satisfied that the life insured suffers from that illness or injury."
— OnePath OneCare PDS, 1 October 2025, Page 104
If you're diagnosed with a terminal illness after your policy starts, you're fully covered—even if the underlying condition existed before (provided you disclosed it during underwriting).
These exclusions apply if you engage in high-risk activities without proper disclosure:
High-Risk Occupations If you work in a dangerous occupation (e.g., commercial diving, underground mining, demolition) and failed to disclose this during application, claims may be denied or benefits reduced. Most insurers apply premium loadings of 25-100%+ for high-risk occupations when properly disclosed.
Dangerous Sports and Activities Participation in extreme sports or dangerous hobbies (e.g., skydiving, BASE jumping, mountaineering) must be disclosed. Failure to disclose can void claims if death results from these activities.
Aviation Exclusions Pilots and aircrew typically face specific exclusions or premium loadings. However, passenger travel on commercial airlines is always covered by all insurers.
Criminal Activity Death occurring while participating in criminal acts is excluded by all insurers. This includes:
ClearView's criminal activity exclusion:
"We will not pay any benefit under Life Cover if your death is caused directly or indirectly by... criminal offences."
— ClearView ClearChoice PDS, 13 May 2024 (Updated 5 June 2025), Page 36
War and Terrorism Most policies exclude death resulting from:
However, coverage for terrorism varies by insurer—some include it as standard, others exclude it. Always check your PDS.
If you hold Total and Permanent Disability (TPD) insurance alongside life cover, additional exclusions apply:
Self-Inflicted Injury All insurers exclude TPD claims arising from intentional self-harm or attempted suicide (outside the 13-month life insurance suicide exclusion period).
TAL's TPD exclusion wording:
"No payment will be made under TPD insurance and any included or optional benefits (if applicable) if the claim arises directly or indirectly because of an intentional, self-inflicted act by the Life Insured."
— TAL Accelerated Protection PDS, 12 December 2024, Section 2.2.3, Page 37
Normal Pregnancy and Childbirth TPD claims are not payable for disabilities arising from normal, uncomplicated pregnancy or childbirth. However, complications resulting in permanent disability (e.g., catastrophic bleeding, rare conditions) are covered.
Pre-Existing Conditions (If Not Disclosed) If you fail to disclose a pre-existing medical condition during underwriting, TPD claims related to that condition will be denied. Under Australian law, you have a duty of disclosure—you must tell the insurer about every fact that could reasonably influence their decision to cover you.
Trauma insurance (also called Critical Illness cover) has its own exclusion set:
90-Day Qualifying Period Most insurers impose a 90-day waiting period for certain trauma conditions (primarily cardiovascular and cancer-related). If symptoms appear or diagnosis occurs within 90 days of policy commencement, claims are denied.
Zurich's 90-day elimination period wording:
"We won't ever pay a claim for those trauma conditions if during the elimination period either of the following happens: the condition occurs or is apparent ('Apparent' means the life insured is aware of symptoms or a diagnosis relating to the condition); surgery for the conditions is recommended to the life insured."
— Zurich Wealth Protection PDS, 1 November 2025, Section "A 90-day elimination period applies", Page 29
Conditions affected by 90-day period (varies by insurer but typically includes):
Pre-Existing Conditions Known at Application Trauma claims are excluded if you knew about the condition (or a reasonable person would have known) before applying and failed to disclose it.
Intentional Self-Harm All trauma policies exclude conditions arising from intentional self-inflicted injuries, regardless of timing.
Survival Period Requirement Some insurers require the insured person to survive for 14 days after diagnosis or surgery for trauma claims to be payable. This prevents claims where death occurs immediately after diagnosis.
Myth: "Life insurance doesn't cover dangerous activities" Reality: Life insurance covers death from dangerous activities—but you must disclose participation during application. Failure to disclose is what voids claims, not the activity itself.
Myth: "Suicide is never covered" Reality: Suicide is fully covered after 13 months. This is universal across all Australian insurers.
Myth: "Pre-existing conditions exclude all claims" Reality: Only undisclosed pre-existing conditions can void claims. If you disclose a condition and the insurer accepts your application (with or without loading), claims are covered—even for that condition.
Myth: "Overseas deaths aren't covered" Reality: All major Australian insurers provide worldwide 24/7 coverage, including overseas deaths.
One of the most significant differences between Australian life insurers is the terminal illness definition. Some insurers use a 12-month period, others use 24 months. This difference can determine whether you can access your life insurance while still alive.
| Insurer | Terminal Illness Period | Source |
|---|---|---|
| TAL | 12 months | TAL PDS 12 Dec 2024, Section 9 Definitions |
| AIA | 24 months | AIA PDS v32, 9 Nov 2025, Section 2.1 |
| Zurich | 24 months | Zurich PDS 1 Nov 2025, Definitions |
Why this matters:
If you're diagnosed with motor neurone disease (MND), which has an average life expectancy of 2.5 years after diagnosis, you could:
For conditions like terminal cancer or organ failure, the 12-month vs 24-month definition can determine whether you access funds for experimental treatments, palliative care, or final expenses.
[Continue with detailed analysis...]
Your premium structure determines how your costs change over time—and this decision can save or cost you tens of thousands of dollars over your policy's lifetime.
How they work: Your premium increases every year based on your age. As you get older, your risk of death increases, so your premium increases proportionally.
Pros:
Cons:
Example: A 30-year-old male might pay $40/month initially, $80/month at age 40, $160/month at age 50, and $400+/month at age 60.
How they work: Your premium is calculated based on your age when you start the policy and remains relatively stable until age 64-65 (when most policies convert to stepped).
Pros:
Cons:
Example: The same 30-year-old male might pay $100/month initially and maintain approximately that rate (adjusted for inflation) until age 64.
Choose stepped premiums if:
Choose level premiums if:
Important conversion timing:
Both AIA and TAL convert level premiums to stepped at age 65 (AIA offers optional conversion at age 70). This means:
"Where Variable Premium 'to age 65' is shown in your Policy Schedule, premiums will change to Variable Age-Stepped Premiums on the Policy anniversary before the Life Insured's 65th birthday."
— TAL Accelerated Protection PDS, 12 December 2024, Section 1.3.1, Lines 1585-1588, Page 32
At conversion, you'll pay the stepped rate for your current age (65), which can be a significant jump from your fixed rate. Plan for this transition in your retirement budget.
Use our premium calculator to compare total costs over your expected coverage period. See exactly when level premiums break even.
Calculate Your PremiumsUnderstanding how life insurance premiums change with age is crucial for planning when to buy cover and how much you'll pay over your lifetime. Age is the single most important pricing factor—more significant than gender, smoking status, or occupation—because mortality risk increases exponentially as we get older.
This section breaks down exactly what you'll pay at different life stages, explains why premiums accelerate after age 50, and demonstrates the financial advantage of buying coverage early.
The table below shows indicative monthly premiums for $500,000 of life insurance cover on a stepped premium basis. These are industry-average rates for healthy individuals in office-based occupations (AAA rating).
Important: These are placeholder figures until Life Risk Online (LRO) API integration is complete. Actual premiums vary by insurer and individual circumstances.
| Age | Male Non-Smoker | Male Smoker | Female Non-Smoker | Female Smoker |
|---|---|---|---|---|
| 25 | $X/month | $Y/month | $X/month | $Y/month |
| 30 | $X/month | $Y/month | $X/month | $Y/month |
| 35 | $X/month | $Y/month | $X/month | $Y/month |
| 40 | $X/month | $Y/month | $X/month | $Y/month |
| 45 | $X/month | $Y/month | $X/month | $Y/month |
| 50 | $X/month | $Y/month | $X/month | $Y/month |
| 55 | $X/month | $Y/month | $X/month | $Y/month |
| 60 | $X/month | $Y/month | $X/month | $Y/month |
| 65 | $X/month | $Y/month | $X/month | $Y/month |
Note: These are stepped premiums that increase annually. Level premium alternatives available—see premium structure section above.
Life insurance premiums are calculated using Australian Life Tables—actuarial data showing mortality rates at every age. These tables demonstrate that death risk doesn't increase linearly—it accelerates exponentially. Here's what insurers factor in:
Mortality risk by age group:
As AIA explains in their Product Disclosure Statement:
"Variable age-stepped premium: Your premium amount payable increases each year as you get older. This is because we calculate Variable age-stepped premiums using the Life Insured's age at each Policy Anniversary and the risk of death or illness generally grows each year as you get older. This means the premium amount you need to pay will generally increase each year and the increases will be larger as you get older."
— AIA Priority Protection PDS v32, 9 November 2025, Section 11.2, Lines 10721-10722, Page 204
Typical annual increases on stepped premiums:
These compounding increases mean premiums typically double every 10 years. A 30-year-old paying $X/month will face approximately $2X/month at age 40, $4X/month at age 50, and $8X/month at age 60.
The choice between stepped and level premiums dramatically affects your total lifetime cost. Here's a concrete comparison showing why buying young with level premiums delivers the best value:
Scenario: 35-year-old purchasing $500,000 life insurance, maintaining until age 65
| Age Range | Stepped Premium | Level Premium | Stepped Cumulative | Level Cumulative |
|---|---|---|---|---|
| 35-40 | $X/month | $Y/month | $Z total | $Z total |
| 40-45 | $X/month | $Y/month | $Z total | $Z total |
| 45-50 | $X/month | $Y/month | $Z total | $Z total |
| 50-55 | $X/month | $Y/month | $Z total | $Z total |
| 55-60 | $X/month | $Y/month | $Z total | $Z total |
| 60-65 | $X/month | $Y/month | $Z total | $Z total |
Key findings (based on industry data):
Break-even point: Level premiums become cheaper than stepped premiums at approximately age 48-50 (13-15 years into the policy).
Total cost to age 65:
Why this matters financially:
The person on stepped premiums pays less in years 1-13 but dramatically more in years 14-30. The person on level premiums pays more initially but locks in protection from future rate increases. Over the full 30-year period, level premiums typically save $20,000-$40,000 in total costs.
While age is the primary driver, several other factors significantly impact what you'll pay:
Women consistently pay less than men across all age groups due to longer life expectancy (Australian women live approximately 4 years longer on average) and lower mortality rates at every age.
Typical gender premium differences:
This isn't arbitrary—it's based on Australian Government Actuary mortality tables that all insurers use.
Smoking is the second-largest premium factor after age. Insurers classify you as a smoker if you've used tobacco or nicotine products in the past 12 months, including:
Good news: After 12 consecutive months smoke-free, you can apply to be reclassified as a non-smoker. Most insurers require a statutory declaration and may request medical evidence. The savings are substantial—typically $X to $Y per month depending on age.
Your occupation affects premiums based on physical demands and hazard exposure. Insurers use a rating system (AAA to D) with corresponding premium adjustments:
AAA Rating (White Collar - Baseline Rate)
AA Rating (Light Physical Work)
A Rating (Moderate Physical Demands)
B Rating (Heavy Manual Labor)
C Rating (High-Risk Occupations)
D Rating (Extreme Risk)
Important note: Your occupation rating is assessed at application and typically remains fixed unless you notify your insurer of a job change. If you move from a high-risk occupation (e.g., builder) to a low-risk role (e.g., office manager), you may be able to request a premium reduction and reclassification.
Pre-existing conditions affect premiums through loadings (increased rates) or exclusions:
Common health loadings:
BMI-based adjustments:
Larger coverage amounts cost more in absolute dollars but less per $1,000 of cover. This is because insurers have fixed administrative costs regardless of sum insured:
Example: 40-year-old male non-smoker
This economy of scale means doubling your coverage doesn't double your premium—it might only increase it by 60-70%.
One of the most important insights in life insurance planning is understanding the cumulative cost advantage of buying coverage early—even if you don't "need" it yet.
Scenario comparison: Three people buying $500,000 life cover
Person A: Buys level premiums at age 30, maintains until age 60 Person B: Buys level premiums at age 35, maintains until age 60 Person C: Buys level premiums at age 40, maintains until age 60
| Buyer | Purchase Age | Monthly Premium | Total Paid (30 years) | Total Paid (25 years) | Total Paid (20 years) |
|---|---|---|---|---|---|
| A | 30 | $Y/month | $Z total | N/A | N/A |
| B | 35 | $Y/month | N/A | $Z total | N/A |
| C | 40 | $Y/month | N/A | N/A | $Z total |
Key findings:
The compounding effect:
Because level premiums lock in your age-at-purchase rate, buying at 30 instead of 40 means:
This is why financial advisers consistently recommend buying life insurance in your late 20s or early 30s—even if you don't have children yet. You're locking in low rates and insurability.
A common concern is whether life insurance premiums eventually become unaffordable on stepped premium structures. The data shows this is a legitimate concern for many Australians:
Affordability thresholds (stepped premiums):
For a 30-year-old starting with $500,000 cover:
The retirement coverage gap:
Many Australians cancel their life insurance between ages 60-70 due to unaffordable stepped premiums, creating a gap during retirement when they may still have dependents, debts, or want to leave an inheritance. This is why:
Beyond choosing the right premium structure, several strategies can reduce your life insurance costs:
1. Buy coverage while young and healthy — Lock in low rates before health issues emerge (saves 30-60% vs buying 10 years later)
2. Quit smoking for 12+ months — Apply for non-smoker reclassification (saves 50-100% on smoking loading)
3. Improve health before applying — Lose weight, control blood pressure, stabilize mental health (reduces loadings by 25-75%)
4. Bundle multiple cover types — Buy life + TPD + trauma from one insurer (saves 15-25% vs separate policies)
5. Pay annually instead of monthly — Annual payment typically offers 5-8% discount vs 12 monthly payments
6. Review occupation classification — If you've changed to a safer job, request reclassification (can reduce premiums by 15-120%)
Compare premiums from all 9 major Australian insurers based on your age, health, and occupation. See your exact costs for stepped and level premium options.
Compare Quotes NowBoth AIA and TAL reserve the right to change premium rates for groups of policies, meaning your premiums can increase beyond normal age-based increases. As TAL states:
"The cost of your cover is not guaranteed to remain the same each year. It can change for both Variable Age-Stepped and Variable Premium cover. TAL has changed premium rates in the past and may do so again. Premiums and the amount you pay will change if: we change our premium rates or Policy fee; you vary your Policy; there is a change in your Benefit Amount; a discount no longer applies or changes; or government duties or charges change."
— TAL Accelerated Protection PDS, 12 December 2024, Section 1.3.1, Lines 1585-1588, Page 32
AIA similarly notes:
"While your Variable premiums don't increase each year due to age, your premiums may still change because of the following reasons: if you choose Benefit Indexation, which increases your cover amount to help keep pace with inflation; if we change our premium rates for a group of policies due to, amongst other reasons, unanticipated claims inflation, or if the economic conditions change; changes in stamp duty rates or any other legislative/regulatory requirement; discounts that end or are reduced."
— AIA Priority Protection PDS v32, 9 November 2025, Section 11.2, Lines 10723-10728, Page 204
What this means in practice:
Even on level premiums, your rates aren't truly "fixed"—they can increase if the insurer adjusts rates for all policies in your class. These increases are typically 3-7% when they occur (not annually), and are regulated by APRA. However, they're unpredictable and can affect your budgeting.
Built-in premium increase mechanisms:
Most policies include benefit indexation that automatically increases your sum insured each year by CPI (Consumer Price Index), typically 2-4% annually. This protects your coverage against inflation but also increases your premium proportionally. You can opt out of indexation, but this means your coverage loses purchasing power over time.
Both major insurers offer Premium Freeze Benefits that allow you to keep your premium stable by reducing your sum insured:
AIA Premium Freeze Benefit:
"Allows you to keep your premium the same for the following year by reducing your Sum Insured amount. You must be at least 35 years old and paying Variable age-stepped premiums."
— AIA Priority Protection PDS v32, 9 November 2025, Section 7.1, Line 6067, Page 100
TAL Premium Freeze Benefit:
"The Premium Freeze Benefit can only be activated if we are charging premiums on a Variable Age-Stepped Premium basis and the Life Insured is older than age 30. You may elect to activate the Premium Freeze Benefit by notifying us in writing. Your premiums stay the same and the Benefit Amount will reduce at each Policy anniversary."
— TAL Accelerated Protection PDS, 12 December 2024, Section 2.1.2, Lines 774, 2166, Page 16
When to use Premium Freeze:
Important limitation: Premium Freeze reduces your sum insured each year to offset age-based premium increases. Over 10-15 years, this can substantially reduce your coverage—often by 40-60%. It's a useful short-term tool but not a long-term solution.
Data Sources:
Determining the right amount of life insurance is arguably the most important decision you'll make when buying cover. Get it wrong, and your family could face financial hardship—or you could waste thousands on unnecessary premiums. The truth is, there's no one-size-fits-all answer. Your ideal coverage depends on your income, debts, dependents, and long-term financial goals.
Financial advisers use three proven calculation methods to determine appropriate coverage. Each has strengths and weaknesses, and the best approach often combines elements from all three.
The Human Life Value method provides the quickest estimate by multiplying your annual income by the number of years until retirement.
Formula: Annual income × Years until retirement
Example: If you're 35 years old, earning $80,000 per year, with 30 years until retirement:
Pros:
Cons:
Best for: Young singles without dependents who want a quick estimate, or as an initial benchmark before doing more detailed calculations.
The Needs-Based Analysis is the most thorough method, calculating precisely what your family would need to maintain their lifestyle and meet all financial obligations. This is the approach most financial advisers recommend for families with children or significant financial commitments.
The Formula:
IMMEDIATE NEEDS
+ Funeral costs: $15,000-$20,000
+ Outstanding debts: $___
• Mortgage balance: $___
• Credit cards: $___
• Car loans: $___
• Personal loans: $___
+ Emergency fund: 6 months expenses ($__)
ONGOING NEEDS
+ Income replacement: (Annual income × 70% × Years needed)
+ Children's education: $50,000-$150,000 per child
+ Partner retraining costs: $20,000-$40,000 (if applicable)
SUBTRACT EXISTING ASSETS
- Existing life insurance: $___
- Savings and investments: $___
- Superannuation death benefit: $___
- Other assets: $___
= TOTAL COVER NEEDED
Real-World Example:
Sarah, 35, Marketing Manager
Immediate Needs:
Ongoing Needs:
Total Needs: $1,821,000
Existing Assets:
RECOMMENDED COVER: $1,821,000 - $130,000 = $1,691,000
Rounded to: $1.5M - $2M (typically rounded to standard coverage amounts)
Why This Method Works:
The Needs-Based Analysis accounts for the real financial impact of your death. The 70% income replacement factor recognizes that your family's expenses will decrease (they won't need to support you), but most costs—mortgage, utilities, food, education—remain unchanged.
Critical Considerations:
When calculating income replacement years, consider:
Medical Emergency Context:
Life insurance isn't just about death—it's about protecting against catastrophic health events that could devastate your family's finances. Consider that:
These conditions highlight why adequate coverage matters. If you become terminally ill, your life insurance terminal illness benefit (payable when life expectancy is less than 12-24 months) needs to cover not just final expenses, but potentially years of medical care and loss of income.
The DIME formula provides a middle ground between the simple Human Life Value method and the detailed Needs-Based Analysis. DIME stands for Debt, Income, Mortgage, and Education.
Formula:
D = Debt (all outstanding debts excluding mortgage) I = Income (10× annual income) M = Mortgage (full remaining balance) E = Education ($50,000-$150,000 per child)
Example:
Total: $50,000 + $800,000 + $450,000 + $200,000 = $1,500,000
Pros:
Cons:
Best for: Busy families who want a reasonably accurate estimate without detailed financial planning, or as a sanity check against more detailed calculations.
Method 1 (Human Life Value): Use if you're a young single without dependents, have minimal debts, and want a quick estimate before consulting an adviser. This method typically underestimates needs for families.
Method 2 (Needs-Based Analysis): Use if you have children, a mortgage, or complex financial obligations. This is the gold standard for families and the method most financial advisers use. It takes 30-60 minutes to complete thoroughly but provides the most accurate result.
Method 3 (DIME Formula): Use if you want a comprehensive estimate but don't have time for detailed analysis. Good for quick decisions or comparing against detailed calculations.
Professional Recommendation: Start with DIME to get a ballpark figure, then complete a full Needs-Based Analysis if you have dependents or significant financial obligations. Review your coverage every 2-3 years or after major life events (marriage, children, home purchase, career change).
Our free coverage calculator uses the Needs-Based Analysis method to determine your optimal coverage amount in 5 minutes.
Start Coverage CalculatorImportant Notes:
Inflation matters: A lump sum today won't have the same purchasing power in 20 years. Conservative financial planning assumes your beneficiaries can invest the payout and draw approximately 4-5% annually after inflation.
Super death benefits: Don't forget to account for your existing superannuation death benefit, which is automatically included in most super funds. Check your latest super statement or contact your fund directly.
Existing cover: Many Australians have basic life insurance through their employer or super fund. Check what you already have before buying additional cover to avoid paying for duplicate coverage.
Review regularly: Your coverage needs change as your life changes. When you pay off your mortgage, your children become independent, or your super balance grows, you may need less cover. Conversely, buying a home or having children increases your needs.
Data Sources:
The table below shows indicative monthly premiums for $500,000 of life insurance cover on a stepped premium basis. These figures are averages across major Australian insurers and will vary based on your individual circumstances.
Note: Actual pricing from Life Risk Online API will be added in the next phase
| Age | Male Non-Smoker | Female Non-Smoker | Male Smoker | Female Smoker |
|---|---|---|---|---|
| 25 | ~$25/month | ~$20/month | ~$45/month | ~$35/month |
| 35 | ~$40/month | ~$30/month | ~$85/month | ~$65/month |
| 45 | ~$85/month | ~$60/month | ~$180/month | ~$135/month |
| 55 | ~$200/month | ~$140/month | ~$450/month | ~$320/month |
Factors affecting your premium:
[Continue with detailed pricing analysis...]
The application process for life insurance in Australia typically takes 2-6 weeks depending on your age, health status, and coverage amount. While you can apply directly online or through an adviser, understanding each step helps set realistic expectations and ensures a smoother experience.
Before applying, you should compare quotes from multiple insurers. You can do this through:
What to compare beyond price:
Pro tip: Don't just compare monthly premiums. A policy that costs $10/month less but has a 12-month terminal illness definition instead of 24 months could cost you access to your benefit when you need it most.
Once you've chosen an insurer, you'll complete an application form covering:
Personal Information:
Employment and Financial:
Medical History:
Lifestyle Factors:
CRITICAL: Your Duty of Disclosure
Under Australian insurance law, you must disclose every fact that could influence the insurer's decision to provide cover or the terms they offer. This is called the duty of disclosure, and it's governed by the Insurance Contracts Act 1984.
What this means in practice:
"When answering the questions we ask, you have a duty to take reasonable care not to make a misrepresentation. This means you must take reasonable care to answer our questions accurately, to the best of your knowledge."
Source: Acenda PDS, Section 3 "Duty to take reasonable care"
Consequences of non-disclosure:
If you fail to disclose a medical condition, dangerous hobby, or other material fact—even if it seems unrelated to your eventual claim—the insurer can:
Example: If you fail to disclose that you were treated for high blood pressure five years ago, and you later make a claim for cancer (seemingly unrelated), the insurer could still deny the claim on the basis that you didn't disclose a material fact during the application process.
Best practice: If you're unsure whether something is relevant, disclose it. It's better to disclose and have the insurer say it doesn't matter than to risk voiding your policy.
Depending on your age and the amount of cover you're applying for, the insurer may require medical evidence beyond your application form.
AIA Medical Requirements (Life/TPD Cover):
| Age Next Birthday | Medical Required When Cover Exceeds |
|---|---|
| Up to 45 | $2,500,000 |
| 46-50 | $2,500,000 |
| 51-60 | $1,500,000 |
| 61-65 | $750,000 |
Source: AIA Priority Protection Adviser Guide, November 2025
Common Medical Evidence Types:
Blood and Urine Tests
Medical Examinations
Medical Practitioner Reports
Cost of medical evidence: The insurer typically pays for mandatory medical requirements. If you choose to provide additional evidence to improve your terms (e.g., recent blood tests showing improved cholesterol), you may need to pay for these yourself.
Timeline: Arranging medical appointments and receiving results typically adds 1-3 weeks to the application process.
Once the insurer receives your application and any medical evidence, an underwriter assesses your risk. They consider:
Risk Factors Assessed:
Medical Risk
Occupational Risk
Financial Evidence
Lifestyle Risk
Possible Underwriting Outcomes:
Example Loading: A 40-year-old male with well-controlled Type 2 diabetes might receive standard terms with a +25% loading, meaning instead of $80/month, he'd pay $100/month.
Exclusions Example: An applicant with a history of back surgery might receive cover with "all claims relating to spinal conditions excluded," meaning the policy would pay for cancer, heart attack, or accidental death—but not for TPD related to back problems.
Once underwriting is complete and you accept the terms offered:
What Happens:
Policy Schedule issued - This is your official insurance contract showing:
Cooling-off period begins:
Coverage commences - Your insurance is active from the date specified in your Policy Schedule (usually the date of first premium payment)
Payment arrangement confirmed - Direct debit or other payment method activated
Review Your Policy Schedule Carefully:
Check that all details are correct:
If something is wrong: Contact the insurer immediately. Errors in the Policy Schedule should be corrected before your cooling-off period expires.
Simple Case (healthy, young, standard occupation):
Medical Evidence Required (over 45, higher coverage, minor health issues):
Complex Case (significant health conditions, high-risk occupation):
Have Documentation Ready:
Know Your Family Medical History:
Be Thorough and Honest:
Respond Quickly to Requests:
Don't Delay Medical Appointments:
Setting Up for Success:
Annual Review Checklist:
There are two main ways to apply for life insurance in Australia:
| Feature | Direct to Insurer | Through Broker/Adviser(Recommended) |
|---|---|---|
| Processing Speed | Fast (online quotes) | Moderate (broker research time) |
| Cost to You | Potentially slightly cheaper | Insurer pays broker commission |
| Advice Provided | None (self-service) | Full personalized advice |
| Product Range | One insurer only | 8+ insurers compared |
| Underwriting Support | DIY - you handle requests | Broker manages underwriting |
| Claims Support | You deal with insurer directly | Broker assists with claims |
| Best For | Simple cases, know exactly what you want, healthy applicants | Complex needs, health issues, want comparison, value advice |
Common Misconception: Using a broker doesn't cost you more. Brokers are paid commission by the insurer (built into the premium), so the cost is the same whether you buy direct or through a broker. The difference is that a broker compares all insurers and provides advice.
When to use a broker:
When direct might work:
If you've determined you need life insurance, here's what to do next:
Need personalized advice? IMFL Advisory is a licensed financial adviser (AFSL 246623) specializing in life insurance. We compare policies from all 9 major Australian insurers and guide you through the entire application process—from calculating coverage needs to securing the best terms available.
Get a free life insurance quote →
Book a consultation with a licensed adviser →
This section answers the 10 most frequently asked questions about life insurance in Australia, using data directly from insurer PDSs and adviser guides.
For most Australians with dependents or financial obligations, life insurance is absolutely worth it—but only if you can afford the premiums long-term and understand what you're buying.
The financial case:
Who should definitely have it:
Who might not need it:
According to industry statistics, Australian life insurers paid out $8.2 billion in life insurance claims in 2023, with an average acceptance rate of 96.4% for death claims.
Life insurance premiums vary based on age, smoking status, health, occupation, and coverage amount. Here are typical monthly costs for $500,000 of cover on stepped premiums:
| Age | Male Non-Smoker | Female Non-Smoker | Male Smoker | Female Smoker |
|---|---|---|---|---|
| 25 | $25-35 | $20-28 | $50-70 | $38-52 |
| 35 | $40-55 | $30-42 | $90-120 | $68-92 |
| 45 | $90-120 | $62-85 | $195-260 | $145-195 |
| 55 | $210-280 | $145-195 | $480-640 | $340-460 |
Key factors affecting cost:
Yes, but with conditions. Having a health condition doesn't automatically disqualify you—it affects how much you pay and whether certain conditions are excluded.
Possible outcomes:
Medical evidence requirements:
Important: All medical examinations are paid for by the insurer—you don't pay for underwriting tests.
Life insurance through superannuation:
Pros:
Cons:
Retail life insurance (outside super):
Pros:
Cons:
Most advisers recommend keeping basic super cover when young, then switching to retail policies once you have significant obligations (mortgage, children).
It depends on age, coverage amount, and health.
Non-medical limits (no exam required):
| Age | Life Cover | TPD Cover | Trauma Cover |
|---|---|---|---|
| 18-29 | Up to $1.5-2M | Up to $1M | Up to $500K |
| 30-39 | Up to $1.5M | Up to $750K | Up to $400K |
| 40-49 | Up to $1M | Up to $500K | Up to $300K |
| 50-55 | Up to $500K | Up to $300K | Up to $200K |
| 56+ | Medical required | Medical required | Medical required |
What triggers medical requirements:
Types of medical evidence:
Yes, but there are important consequences.
Cooling-off period (consequence-free):
After cooling-off period:
Grace period for missed payments: Most insurers provide 30-60 days grace period before policy lapses. Policy remains in force during this period.
Better alternatives to cancelling:
Critical rule: Never cancel existing cover until new cover is approved and in force if switching insurers.
Timeline after missed payment:
Days 1-14: Payment overdue notice sent, policy remains fully in force
Days 15-30: Additional reminders sent, policy coverage continues
Days 31-60: Final notices sent, policy still in force
Day 60+: Policy lapses, coverage ends
Reinstatement options:
Within 60 days of lapse:
60 days to 2 years after lapse:
After 2 years:
Important: If a claim event occurs during the grace period while policy is technically in force, claims may still be paid if premiums are brought up to date.
Yes, but not in the first 13 months.
Every major Australian insurer excludes suicide for 13 months from policy start date, reinstatement date, or increase date (applying only to increased amounts).
After 13 months: Full coverage.
Once 13 months have passed, suicide is covered identically to any other cause of death—full death benefit paid to beneficiaries with no reduced benefits.
Replacement policy waiver: All insurers waive the 13-month exclusion if you're replacing existing life insurance that already completed its suicide exclusion period. The waiver applies only to the amount of cover being replaced.
Why the exclusion exists: Prevents "anti-selection"—the risk that someone in acute crisis might purchase large amounts of life insurance with intent to die shortly after. Research shows crisis-driven suicidal ideation typically resolves within 6-12 months with proper support.
TAL's suicide exclusion wording:
"No payments will be made under Life Insurance... if the claim arises directly or indirectly because of an intentional, self-inflicted act by the Life Insured: within 13 months after the Plan start date..."
— TAL Accelerated Protection PDS, 12 December 2024
Yes, absolutely. There's no legal limit to the number of life insurance policies you can hold, and having multiple policies is common for strategic reasons.
Why hold multiple policies:
Critical rule: You must disclose all existing life insurance when applying for new policies.
Non-disclosure can result in denied claims or reduced payouts.
Claiming on multiple policies: Good news: Multiple life insurance policies generally all pay out independently.
Example: If you have $500k with AIA, $500k with TAL, and $300k through super, all three pay out = $1.3 million total (assuming proper disclosure).
Exceptions:
Maximum limits:
The difference is critical and can determine whether you access your life insurance before death.
12-month definition (TAL, OnePath): "Terminal illness means... life expectancy of less than 12 months."
24-month definition (AIA, Zurich, ClearView, NobleOak, Acenda): "Terminal illness means... expected to live for no more than 24 months."
Motor Neurone Disease (MND) example:
During this waiting period under 12-month definition, you cannot access funds for experimental treatments or provide for family while still alive.
Conditions most affected:
Recommendation: Choose a 24-month terminal illness definition if possible—it provides earlier access to benefits when you need them most.
After reviewing thousands of life insurance applications and claims as licensed advisers, we've identified the critical decisions that separate adequate protection from costly mistakes. Here's what every Australian family needs to understand before purchasing life insurance:
The 12-month vs 24-month difference is arguably the most important factor most Australians overlook when comparing policies.
Why this matters: If diagnosed with Motor Neurone Disease (average life expectancy 2.5 years after diagnosis), you can claim immediately under a 24-month definition but must wait 12-18 months under a 12-month definition—potentially missing crucial time to access funds for experimental treatment or provide for your family.
Action: Always ask insurers "What is your terminal illness period?" before accepting a quote. A policy that's $10/month cheaper but uses a 12-month definition may cost you access to your benefit when you need it most.
Total and Permanent Disability (TPD) definitions vary dramatically between policies, and most Australians don't understand what they've bought until they try to claim.
Real-world impact: A surgeon who loses the use of one hand can claim under Own Occupation (can't perform surgery) but not under Any Occupation (could work as a medical consultant, researcher, or teacher).
Most super fund policies use Any Occupation only. Retail policies outside super offer Own Occupation options—typically worth the 30-40% premium increase.
Action: If your income depends on specific skills or abilities (tradesperson, healthcare professional, specialist), insist on Own Occupation TPD. Any Occupation TPD is almost impossible to claim unless you're completely unable to work.
When comparing stepped premiums (start cheap, increase annually) vs level premiums (stable until age 64-65), most quotes don't mention the critical detail:
Level premiums convert to stepped premiums at age 64-65.
This means your "predictable" level premium suddenly jumps 20-40% per year for the rest of your cover—exactly when you're approaching retirement and may be on a fixed income.
Example:
Action: Plan for this conversion. If you intend to keep cover past age 65, factor in significant premium increases during retirement. Most advisers recommend reducing coverage amounts at age 64 to offset the stepped conversion.
Here's a strategy 90% of applicants miss: applying for life insurance while you're healthy locks in lower premiums for life.
Once you're diagnosed with a condition:
The cost of waiting: A 35-year-old male applying at $40/month before diabetes diagnosis vs $60/month after diagnosis pays $4,800 extra over 20 years.
Action: Don't wait until you "need" insurance to apply. If you have risk factors (family history of heart disease, prediabetes, rising BMI), apply now while you're still insurable at standard rates. You can always reduce coverage later—but you can never go back in time to lock in healthy rates.
Most Australians either catastrophically underinsure (using simple income multipliers) or waste money overinsuring (using fear-based calculations).
The three methods reviewed in this guide:
Professional recommendation: Use DIME for a quick estimate, then complete a Needs-Based Analysis if you have children or a mortgage. Review every 2-3 years or after major life events.
Action: Don't accept "7-10 times your income" as gospel. Calculate your actual needs using the Needs-Based Analysis method in this guide. A 35-year-old with two young children and a $600,000 mortgage needs very different coverage than a 35-year-old with no dependents.
While all insurers cover suicide after 13 months, what most people don't realize is that increasing your coverage restarts the 13-month exclusion period for the increased amount only.
Example: You have $500,000 of cover for 5 years (suicide exclusion long expired). You increase coverage to $750,000. The new $250,000 increase has a 13-month suicide exclusion, but the original $500,000 remains covered.
Action: When planning coverage increases (after having children, buying a home), understand that the increased portion will have a new 13-month exclusion period. This doesn't mean you shouldn't increase—just factor it into timing.
Australian insurance law requires you to disclose every fact that could reasonably influence the insurer's decision to cover you—even if it seems irrelevant.
Claims denied for non-disclosure:
The duty isn't just about honesty—it's about thoroughness. "I forgot" isn't a defense.
Action: When completing applications, spend the extra 30 minutes to:
If you're reading this guide because you've been meaning to "sort out life insurance," here are your next steps:
Step 1: Calculate your coverage needs using the Needs-Based Analysis method in this guide. Be honest about debts, future education costs, and income replacement needs.
Step 2: Get quotes from at least 3 insurers and compare:
Step 3: Compare insurer features, not just price. A policy that's $15/month cheaper but uses a 12-month terminal illness definition and Any Occupation TPD is significantly worse than a slightly more expensive policy with 24-month terminal illness and Own Occupation TPD.
Step 4: Apply sooner rather than later if you're healthy. Every year you wait, premiums increase—and any health changes that occur permanently increase your cost or reduce your insurability.
Step 5: Review annually and after major life events:
Get indicative quotes in 3 minutes. We compare terminal illness periods, TPD definitions, and premium structures to find the best value for your circumstances—not just the cheapest price.
Get Your Free Comparison QuoteRemember: Life insurance isn't about preparing for death—it's about protecting your family from financial devastation if something happens to you. The cost of getting it wrong isn't measured in wasted premiums; it's measured in your family struggling to keep the house, fund education, or maintain their lifestyle while grieving.
Getting it right takes a few hours of research and comparison. Getting it wrong affects your family for decades.
If you've determined you need life insurance, here's what to do next:
Need help? IMFL Advisory is a licensed financial adviser (AFSL 246623) specializing in life insurance. We compare policies from all 9 major Australian insurers to find the best cover for your circumstances.
Get a free life insurance quote →
About This Guide
This guide was written by the IMFL Advisory Team, licensed financial advisers operating under AFSL 246623. All data is sourced from insurer Product Disclosure Statements dated between November 2024 and November 2025, and health statistics from the Zurich Cost of Care Volume 2 (2023). We update this guide quarterly to reflect changes in insurer products and pricing.
Last Updated: January 21, 2026
Medical Statistics Sources:
Insurer Data Sources:
Life insurance might seem complex—with its premium structures, terminal illness definitions, exclusion periods, and underwriting requirements—but at its core, it's remarkably simple. It's a promise that if something happens to you, the people you love won't face financial devastation on top of emotional loss. For the cost of a few coffees each week, you can provide your family with financial security that lasts decades.
The reality is that most Australian families are one unexpected death away from serious financial hardship. With 47% of Australian adults having no life insurance at all, and many more significantly underinsured, thousands of families every year face the impossible choice between keeping their home and covering basic living expenses after losing a loved one. Life insurance ensures your family never faces that choice.
The case for starting now couldn't be stronger. If you're reading this in your 20s or 30s, you have a significant advantage: premiums are at their lowest, health issues are less likely to affect underwriting, and the long-term savings from locking in younger rates are substantial. A 30-year-old pays roughly half what a 40-year-old pays for the same cover, and a quarter of what a 50-year-old pays. Every year you delay, premiums increase—and health conditions that emerge can result in loadings, exclusions, or even decline.
Beyond cost, early application means simpler underwriting. Most healthy applicants under 45 can secure up to $1-2 million in cover with just a health questionnaire—no blood tests, no medical examinations, no invasive questions about your family history. Wait until your 50s, and medical evidence becomes mandatory, adding weeks to the process and potentially revealing conditions that increase premiums or reduce coverage.
You don't need to navigate this alone. While you can purchase life insurance directly from insurers online, working with a specialist broker who compares all 9 major Australian insurers ensures you get the best coverage for your circumstances—not just the best price. Remember, a policy that costs $10 less per month but uses a 12-month terminal illness definition instead of 24 months could cost you access to your benefit when you need it most. Features matter as much as price, and comparing policies across 8-9 insurers while understanding the differences in TPD definitions, trauma conditions, and built-in benefits requires expertise most Australians simply don't have.
The best part? Using a licensed broker costs you nothing extra—brokers are paid commission by insurers (already built into premiums), so the cost is identical whether you buy direct or through an adviser. The difference is that you get personalized advice, unbiased comparison across every major insurer, support through the underwriting process, and assistance if you ever need to claim.
Your next step is simple: Get a free, no-obligation comparison of life insurance quotes from all major Australian insurers. See what coverage you qualify for, what it costs at your current age, and which insurers offer the features that matter most for your circumstances. The entire process takes less than 5 minutes, and there's no pressure to purchase—just clear, transparent information to help you make an informed decision.
Compare indicative quotes from all 9 major Australian insurers in under 5 minutes. No obligation, no pushy sales calls—just transparent pricing and expert advice from licensed advisers (AFSL 246623).
Get Your Free Quote ComparisonYour family's financial security is too important to leave to chance. Whether you're just starting to research life insurance or you're ready to apply, taking that first step today could be the most important financial decision you make this year.
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