How Much Does Life Insurance Cost?

Find out some of the key factors which can influence the cost of life insurance in Australia with Savvy.

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, updated on July 10th, 2023       

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Life Insurance Banner - Female hand placing a coin in a piggy bank

Life insurance can serve as a much-needed safety net for your loved ones if you pass away or are no longer able to work. However, the cost of life insurance depends on a wide range of factors, including your age, health, lifestyle, occupation, and the type of policy you choose.

If you're looking for more information on the cost of life insurance and how to find the best policy to suit your needs and budget, you can learn about it with Savvy. Find out what the key variables are which can impact your life insurance policy in one place before you buy.

How much does life insurance cost in Australia on average each month?

There are many factors which can play a role in determining the cost of your life insurance policy per month. However, here are some indicative average quotes for monthly life insurance premiums currently available in Australia*:

Age Male Female
20
$16 to $32
$8 to $15
30
$10 to $16
$7 to $13
40
$12 to $16
$9 to $13
50
$28 to $45
$19 to $36
60
$127 to $166
$80 to $110
70
$527 to $672
$331 to $398

*Quotes obtained from Compare Club based on office workers in New South Wales who are non-smokers and insuring a sum of $250,000 through life cover. Correct as of April 2023 but subject to change.

What factors can impact the cost of life insurance?

When it comes to the cost of life insurance, there’s a range of key factors which can impact how much you will pay. Some of the key factors to consider include:

  • Your age: generally speaking, the younger you are when you take out a policy, the cheaper your premiums will be. How much a policy costs for a 20-year-old will be very different than for a 55-year-old, for example. This can be seen in the table above, with the most significant difference seen in policies for those over 60.
  • Your gender: life insurance for women often costs less than for men, as they tend to live longer and are generally considered an overall lesser risk to insure.
  • Your occupation: some occupations are considered higher risk than others, so if you have a job that is particularly dangerous or involves working in hazardous environments, you may have to pay more for coverage than someone in a low-risk job, such as an office worker.
  • Your health and medical history: if you have pre-existing medical conditions or a history of serious illness, you may have to pay more for coverage. Alternatively, some insurers may approve you for coverage with exclusions specific to your pre-existing conditions or past illnesses, while others may even decline your application.
  • Your family medical history: if your family has a history of serious illnesses or medical conditions, this may also impact the cost of your coverage, even if you haven’t been diagnosed with this illness yourself.
  • Your covered amount: the more coverage you buy, the more you’ll pay in premiums. For instance, a life insurance policy with a covered amount of $250,000 will always cost less than the same policy with $1 million insured.
  • Whether you smoke: smokers are considered a higher risk to insure than non-smokers, so you’ll have to pay more if you smoke. Your premiums may be doubled as a smoker compared to those for non-smokers.
  • Your lifestyle and hobbies: if you engage in high-risk activities or have a hobby considered dangerous by your insurer, such as bungee jumping or paragliding, this may also impact the cost of your coverage.
  • The type of insurance you choose: different types of life insurance have different costs associated with them, so you’ll need to weigh up which one is most appropriate for your needs and comes at the most affordable price.

If you’re considering purchasing life insurance, it is important to understand how these factors can impact the cost of your coverage. Comparing your options thoroughly across a variety of insurers can help you find the cheapest life insurance policy which meets your cover requirements.

What’s the difference between stepped and level premiums and how do they impact the cost of life insurance?

Stepped and level premiums refer to two different methods of calculating the cost of life insurance.

Stepped premiums are generally cheaper when you first take out the policy, but they increase each year as you get older. This is because they are calculated based on your current age and the likelihood of you making a claim at that age. In contrast, level premiums are higher when you first take out the policy, but they remain the same throughout the life of the policy, only increasing with inflation across your policy’s term.

The impact of choosing between stepped and level premiums depends on your age, health and the expected length of time that you’ll hold the policy. If you are young and plan to hold the policy for a long time, a level premium may be more cost-effective in the long run.

On the other hand, if you’re older and don't expect to hold the policy for a long time, a stepped premium may be more affordable in the short term. It's important to weigh up the pros and cons of each type of premium to help you determine which is best for your individual circumstances.

Top tips for reducing the cost of your life insurance

Quit smoking

Quitting smoking can significantly reduce your life insurance premiums, as smoking is a major risk factor for many health conditions. Non-smokers are generally seen as lower risk by insurance providers, so remaining smoke-free for 12 months can cut your life insurance premiums down considerably.

Focus on your health

Maintaining or improving your overall health can also help to lower your life insurance premiums. This could involve maintaining a healthy weight, regularly exercising and managing any existing health conditions, as well as cutting down on activities which insurers may deem to be risky.

Shop around

It's important to compare multiple insurance providers and policies to ensure you're getting the best deal possible. Considering a wide range of options online, which you can do through Savvy, can help you find the right policy for your needs and budget among the vast range of insurers in Australia.

Reduce your covered amount

While it's important to have enough coverage to protect your loved ones, you may not need as much as you originally thought. Review your current situation and your family's needs to help determine if you can reduce your coverage. Keep in mind that as your financial situation changes, you can adjust your coverage.

Frequently asked questions about life insurance and how much it costs

Can I save money by paying for life insurance annually instead of monthly?

Paying for life insurance annually can be cheaper than paying monthly. This is because some insurers offer a discount for paying upfront, as this can help reduce administrative fees on their end. However, it's important to ensure you can afford the upfront payment and compare the total cost of paying annually versus monthly.

How can I find out how much life insurance will cost me?

You can find out how much life insurance will cost you by comparing quotes from different insurers. Alternatively, you’ll be able to compare offers in one place when you fill out a simple online form through Savvy. This will help provide you with an indication of what the cheapest policies are from our panel of leading insurers based on your profile.

Do I need a medical exam to get life insurance?

Depending on your age, health and insurer you choose, you may need to complete a medical exam as part of the life insurance application process. This is to determine your overall health and any potential risks that may affect your coverage or premium. However, some insurers offer policies that don't require a medical exam, though these may come with higher premiums.

How do I choose the right amount of life insurance coverage?

To help you determine how much insurance you may need, consider your current debts, dependents, and future financial needs. Choosing the right amount of insurance is important to help you ensure you have adequate protection without overpaying for unnecessary coverage. It's important to review and adjust your coverage as your circumstances change.

Are there any discounts or promotions available to lower the cost of life insurance?

Some insurers may offer discounts or promotions for life insurance. For example, some companies may offer lower premiums for those who bundle their policies with other insurance products. It's important to shop around and compare quotes from multiple insurers to help you find the best deal.

Are there any jobs which aren't able to be insured?

There are some jobs which may be considered high-risk or uninsurable by life insurance providers, such as firefighters, deep-sea fishermen or extreme sports athletes. Insurance for these jobs may alternatively come with higher premiums or exclusions specific to your work or require additional coverage to mitigate the risk. It's important to disclose your occupation when applying for life insurance to cut down the risk of your policy being voided.

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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.