Choosing Life Insurance

Find out more about the process of choosing and comparing life insurance policies with Savvy in our guide.

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, updated on July 10th, 2023       

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Life Insurance Banner - Young couple choosing their life insurance policy on a tablet

Life insurance is an important consideration for anyone, as it can provide a financial safety net for your loved ones in the event of your covered injury, illness or death. However, with so many policies on the market, it isn’t always easy to choose the right one for your needs. Learn about some of the key ways to compare life insurance offers before you make your final call right here with Savvy in our comprehensive guide.

How do I choose the best life insurance policy for my needs?

Choosing the best life insurance policy can be a challenging, but crucial, task. With so many options available, it's essential to consider your needs and budget carefully. Some of the factors to consider to help you select the best life insurance policy for your needs include:

Consider the types of life insurance available

In Australia, there are four main types of life insurance on offer:

  • Life cover: also known as term life insurance, it can pay out a lump sum to your beneficiaries upon your death or terminal illness diagnosis (subject to your insurer’s terms and conditions).
  • Income protection cover: can pay an ongoing benefit of up to 70% of your income if you’re temporarily unable to return to work, which can last up to five years or when you reach a certain age, such as 65.
  • Total and permanent disability (TPD) cover: can pay out a lump sum of up to $3 million to $5 million if you’re permanently disabled and unable to return to your previous position (Own Occupation) or any position suited to your education, experience and training (Any Occupation).
  • Trauma cover: can pay out a lump sum of up to $2 million if you’re diagnosed with a critical illness or suffer a severe injury.

It’s important to think about which types of cover you’d like and whether you wish to combine multiple different policies to increase your overall coverage.

Assess your budget

It's important to choose a life insurance policy that fits your budget. Consider how much you can afford to pay in premiums and select a policy which provides the most suitable coverage at a price you can afford.

Think about how much coverage you may need

The amount of coverage you need depends on your individual circumstances. Consider your outstanding debts, living expenses, and other financial obligations when determining how much coverage to purchase. Importantly, think about how much is a reasonable amount to support your family and any medical expenses while you’re off work or pass away.

Look at the inclusions and exclusions

Read the fine print of any life insurance policy to understand what is included and excluded from coverage. For example, some policies may exclude coverage for certain pre-existing medical conditions or hazardous activities.

Compare extra policy benefits

Some life insurance policies offer additional benefits, such as critical illness coverage or accidental death coverage. Consider these additional benefits when comparing policies to ensure you choose a policy that meets your needs.

Comparing policies can help you find the best life insurance policy for your needs. With Savvy, you can consider offers from leading insurers side-by-side instantly. Simply fill out an online form to receive offers from reputable insurance providers. If you find one which best suits your needs and budget, you can go ahead and choose to buy it online after discussing your options with a life insurance expert.

What factors can affect the cost of my life insurance when choosing my policy?

The cost of your life insurance policy can depend on several factors, including:

  • Age: older individuals may be subject to higher premiums, such as seniors compared to those over 40.
  • Health status: if you have any pre-existing medical conditions or a family history of them, you may face higher premiums.
  • Lifestyle: factors such as your occupation, hobbies and travel destinations can impact the cost of your policy.
  • Smoking status: smokers can pay almost double for their life insurance compared to those who don’t smoke.
  • Coverage amount: the higher the coverage amount, the higher the premiums may be.
  • Policy type: the type of policy you choose can affect the cost of your premiums. For instance, life cover won’t cost the same as trauma cover.
  • Waiting period: policies with shorter waiting periods before coverage begins (particularly with income protection) may come with higher premiums.
  • Insurer: different insurers may have different rates and underwriting criteria, so it's important to compare quotes from multiple providers.

By understanding how these factors can impact the cost of your life insurance policy, you can better assess your options and maximise your chances of finding and choosing a policy that fits your needs and budget.

Frequently asked questions about choosing life insurance

Can I cancel or change my life insurance policy after I choose and purchase it?

You can usually cancel your life insurance policy and receive a full refund after purchase if it falls within your cooling-off period, which is generally up to 30 days. However, you likely won’t be able to receive a refund if you cancel outside this period.

Will I need to undertake a medical exam when choosing my life insurance?

Some policies may require a medical exam as part of the application process, particularly if you’re older or have pre-existing health conditions. However, there are also options available for life insurance with no medical exam, so check with your insurer if you’re unsure.

Can I choose life insurance for my children?

Some life insurance companies offer specialist protection for children, although it’s important to carefully consider the benefits and costs before doing so.

Am I able to be covered by life insurance if I’m overseas?

It’s often possible to be covered by life insurance if you’re travelling overseas, but it may depend on the specific policy and insurer. Be sure to check the terms and conditions of your policy to ensure you have adequate coverage. For instance, you’ll still need to comply with Australian Government travel advice.

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Compare life insurance policies side-by-side

Through Savvy, you can consider a range of competitive life insurance policies from reputable insurers, whether you're after life, income protection, trauma or TPD cover. Get the ball rolling on comparing your available options today!

Disclaimer:

Savvy is partnered with Compare Club Australia Pty Ltd (AFS representative number 001279036) of Alternative Media Pty Ltd (AFS License number 486326) to provide readers with a variety of life insurance policies to compare. Savvy earns a commission from Compare Club each time a customer buys a life insurance policy via our website. We don’t arrange for products to be purchased from these brands directly, as all purchases are conducted via Compare Club.

Savvy does not compare all life insurance policies or providers currently operating in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.

For any further information on the variety of insurers compared by Compare Club or how their business works, you can read their Financial Services Guide.