Premium

A premium is the regular payment you make to keep an Australian insurance policy active. Most policies offer monthly, quarterly, or annual frequencies, and the amount is recalculated each year on your renewal date.

How insurers price premiums

For life insurance, income protection, and TPD, insurers calculate premiums from these factors:

• Age at the start of cover (and current age for stepped policies).
• Gender and smoking status.
• Occupation class (white-collar, blue-collar, hazardous).
• Health history disclosed during underwriting.
• Sum insured or monthly benefit amount selected.

Insurers use actuarial data and APRA (Australian Prudential Regulation Authority) guidelines to set fair pricing across the risk pool.

Tax treatment

Australian tax law treats premiums differently by product type:

• Income protection premiums are generally tax-deductible against personal income.
• Life and TPD premiums held outside super are typically not deductible.
• Premiums paid from super are deductible to the fund, not to you personally.

Why premiums can change

Even on the same policy, premiums move over time due to indexation increases on sum insured, age-based increases on stepped structures, and changes you make to cover.

Your disclosure rights

Under Australian consumer law, insurers must disclose all premium costs, fees, and charges in the Product Disclosure Statement (PDS) before purchase. You can compare premiums across insurers and switch during the cooling-off period without penalty.