Best Life Insurance

Considering life insurance? Not sure how to get the best policy for you? Find out more here.

Last updated on May 4th, 2022 at 03:23 pm by Bill Tsouvalas

Compare Best Life Insurance Quotes

Life is valuable and it’s important you know how to take out the best life insurance to give you and your loved ones the necessary financial support if something goes wrong. The best life insurance is unique to everyone, but it can prove a difficult task to find the one that’s the best fit for you. Find out how to compare your options and choose the best life insurance for your situation.

How do I get the best life insurance?

There are a variety of ways you can work out which life insurance policy is best for you. To find the best life insurance policy that suits your needs, make sure you do the following:

Compare different policies

You should look extensively across an array of insurers. Look at things like key features but also the benefit amounts of these features. You need to make sure that your choice of cover supports your situation and any injury, illness or potentially death scenario which could eventuate and cause financial concern for you or your loved ones.

Determine which policy type is right for you

There are four forms of life insurance cover which you can compare – life cover, trauma insurance, total and permanent disability (TPD) insurance, and income protection insurance. Each type offers financial protection for different situations which may involve being unable to return to work or if the worst happens and you pass away. You’ll need to compare the pros and cons of each type of life insurance and decide which type will provide you with the best cover when you need it the most.

Ensure that your policy coverage is appropriate

Break down your finances and calculate how much cover you will need if a worst-case scenario does eventuate. Make sure your coverage not only meets your potential financial needs, but exceeds them so you will be financially comfortable. Consider things like medical expenses, outstanding debts, living expenses and costs related to your kids if you have them.

Reduce the cost of your premiums

You will need to decide whether you would like to purchase your life insurance cover from an insurer, through a broker or via your super. Buying direct through an insurer will be a quick approval process with minimal medical underwriting. Going through a broker will be a longer approval process but your cover can be better tailored to you. Lastly, purchasing life insurance cover through your super will have your application automatically accepted, but reduce your retirement savings and provide less comprehensive cover. In addition, consider paying for your premium annually to avoid administrative fees when processing more frequent payments.

What is the best type of life insurance?

There are different types of life insurance which can offer you protection in the instance of a range of medical events. Types of life insurance cover include:

Life cover (also known as term life insurance)

Life cover will pay out a lump sum amount to your nominated beneficiaries when you pass away. If you don’t have a nominated beneficiary, your estate or super trustee will make a decision on who receives the money. Terminal illness cover may also come with life cover. This will pay out a lump sum amount if you get diagnosed with a terminal illness and your life expectancy is limited as a result.

Trauma insurance

In the event of a critical illness or serious injury, trauma insurance will assist you by providing a lump sum amount to support your financial needs. This money can be spent on whatever you please including medical expenses, bills and debt, or ongoing living expenses. Trauma insurance is designed to provide you immediate financial relief and allows you to continue your recovery without concerning about finances.

TPD insurance

If you’re totally and permanently disabled and unable to return to work, TPD insurance can support you, your partner, or your family by providing financial support through a lump sum payout. TPD insurance can cover you if you are unable to return to work in the same job you had prior to your disability or if you’re unable to work in a job relevant to your experience or education ever again.

Income protection insurance

Income protection insurance will provide you with cover for up to 85% of your annual income if you are seriously injured or critically ill and can’t return to work. As opposed to a lump sum payment, income protection insurance will be paid fortnightly or monthly and act as a replacement to your regular income to offer you financial relief.

How do I compare the best life insurance quotes in Australia?

When you’re taking out life insurance, there are a number of things you should compare to get the best policy for you.

  • Type of insurance – you must compare the types of life insurance, as each serves a different purpose and could act as a replacement to your income or provide a lump sum to offer immediate financial support.
  • The inclusions of your cover – no matter what type of life insurance cover you choose, you must make sure your policy features cover for the right illnesses, injuries or death situations so you won’t be excluded from cover.
  • Exclusions of your cover – you should also consider the exclusions of any policies you’re comparing. The cheaper the policy, the more exclusions it’s likely to have. To find out about the exclusions of the policies you’re comparing, check out their Product Disclosure Statement (PDS).
  • Benefit amounts/limits – similar to other insurance policies, life insurance has a benefit amount which you will be paid out in the event you make a claim on your policy. It’s vital you take out cover with a benefit amount which will provide you the necessary financial support in your time of need. In saying that, you shouldn’t pay an expensive premium for a high benefit amount which you don’t need. Similarly, you shouldn’t pay a low premium for cover with a low benefit amount which won’t adequately support the financial needs of you, your partner or your family.
  • Waiting periods – before you can make a claim on your cover, your life insurance policy will have waiting periods which apply. To ensure you can make use of your cover at the earliest time possible, you should try to find policies with the shortest waiting periods.
  • Current premiums and long-term premiums – when comparing your life insurance options, consider both the current and long-term costs of your premiums. While a premium may cost more now, it could prove to be the cheaper option in the long run.
  • The claim-making process – to ensure the process of making a claim is easy, you should compare the processes offered by various insurers. If it’s a long and drawn-out process, it will take longer for your benefit amount to be paid out and delay the financial assistance you need.
  • Type of insurer – consider both bigger insurers and smaller budget insurers. Smaller budget insurers may offer cheaper premiums but this could be at the cost of financial coverage or more comprehensive cover.

What are the benefits of the best life insurance policies?

Provides financial assistance when it’s needed the most.

When the worst happens and you are out of work with no income, or your partner or family has no financial support, life insurance can help meet the financial needs of you or your loved ones.

Policies are flexible.

Despite the complexities of life insurance, it is very flexible and offers various types of cover which can benefit you in many situations.

Free to choose how to spend your insurance payout.

There are no restrictions on how you choose to spend your benefit amount. It can go towards covering medical expenses, debts or living expenses, or instead it could go towards a holiday for you and your family.

Provide you, your partner or your family with peace of mind.

If the worst does happen and you are critically ill, seriously injured or pass away, life insurance will offer just a little bit of peace of mind knowing that the financial situation doesn’t need to be worried about.

How much life insurance cover do I need?

Top tips for finding the best life insurance policy

Compare your options

To find the best life insurance policy for you, make sure you compare your options across a range of insurers. While a policy you may discover early on in your research looks like the perfect fit, you will discover there are better options out there. Savvy is a great place to do this, as our comprehensive comparison tools can help you find the right policy to suit your needs.

Prioritise getting the right balance in your life insurance cover

To get the best life insurance for you, strive to get the right balance in your cover between your policy’s price and the benefit amount. You don’t want to be paying an unnecessarily expensive premium for a high benefit amount which you don’t need. Similarly, you don’t want to pay a low premium which provides a low benefit amount that doesn’t meet your financial needs if something goes wrong.

Consider taking out a level premium to get the best life insurance

As opposed to a stepped premium, a level premium will largely remain at the same price in both the short term and long term. A level premium will only increase if your insurer decides to raise their premium rates. While a level premium will be more expensive when you initially take out life insurance, the long-term costs should be cheaper than taking out an ever-increasing stepped premium.

Read your policy’s PDS

It’s important you read your policy’s PDS thoroughly so you’re aware of your inclusions and situations where you’ll be excluded from your cover. Life insurance can be complex but reading the PDS can help clarify things for you.

Frequently asked questions about the best life insurance

Can life insurance be tax deductible?

Yes. Income protection life insurance can be tax deductible but only if you’re paying for it with your own income and not through superannuation. This is because the ATO will allow you to claim the cost of your income protection insurance against any income you have lost.

Can I bundle together different types of life insurance policies?

Yes. If you bundle together different life insurance policies, your insurer may provide a discount. This will also apply if your partner takes out a life insurance policy with the same insurer.

Can I change to a new life insurance policy without another health check?

If you’ve had a health check in the last five years, some insurers won’t require you to have another one. This will also largely depend on your age. The older you are, the more likely it is that the insurer will require another health check. Make sure to only cancel your old life insurance cover when your application has been accepted by your new insurer.

Will I be taxed on any lump sum payment I receive from my life insurance cover?

No. If you make a claim and receive a lump-sum payment, this money will not be taxed.

How frequently should I pay off my life insurance premium?

You can choose to pay off your life insurance premium with fortnightly, monthly, or annual payments. If you pay your premium annually it tends to be cheaper as there are less admin fees involved than more frequent payment cycles.

Do I continue paying my life insurance premium after making a claim?

If you make a claim on a death policy, you will clearly no longer have to pay your premiums. Should your claim pertain to a living insurance policy – e.g., trauma insurance, TPD insurance or income protection insurance – the amount of the benefit paid will be taken off your premium.