How to Reduce Life Insurance Premiums

Find out some of the key ways to reduce the cost of your life insurance premiums right here with Savvy.

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, updated on July 10th, 2023       

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Life insurance can be a vital safety net for your loved ones in the event of your unexpected passing. However, the cost of life insurance premiums can add up quickly over time, potentially making it difficult to maintain coverage. Fortunately, there are strategies you can use to reduce your life insurance premiums and keep your coverage in force.

Learn about some of the many ways you can reduce the cost of your life insurance policy to help you access cheaper premiums with Savvy. Consider each of these before buying your policy or contacting your insurer so you can be more confident about selecting the option (or options) best suited to your needs.

What are some of the main ways to reduce the cost of life insurance premiums?

Reducing the cost of life insurance premiums in Australia is possible through several strategies. Some of the main ways to lower your life insurance premiums include:

  • Reduce your covered amount: one way to reduce the cost of your life insurance premiums is to lower the amount of coverage you have. The less coverage you have, the lower your premiums will be. It’s important to consider whether the reduction in coverage is worth cheaper premiums for the sake of you and your family.
  • Quit smoking: smokers pay much higher premiums for life insurance than non-smokers. This includes those who use other smoking products such as vapes, chewing tobacco and nicotine patches. Quitting smoking and remaining smoke-free for at least 12 months can result in significant savings on your life insurance premiums.
  • Make other positive lifestyle changes: maintaining a healthy weight and exercising regularly can also help reduce the cost of life insurance premiums, as well as potentially cutting out hobbies which are considered particularly risky like bungee jumping.
  • Opt for a longer waiting period: choosing a longer waiting period on your income protection policy before benefits are paid can lower your premiums. This means that if you become seriously ill or injured, you’ll have to wait longer to start receiving your benefits. Choosing a shorter benefit period can also reduce your income protection premiums.
  • Remove policy riders: adding riders to your policy can increase the cost of your premiums. Removing unnecessary added benefits can help you save money, such as if you previously added cover for your child but they’ve since grown up.
  • Bundle policies with the same insurer: if you have multiple types of life insurance, such as life cover and total and permanent disability (TPD) cover, bundling them with the same insurer can lead to a discount on your premiums in some cases.
  • Pay annual premiums instead of monthly: paying annual premiums upfront can result in savings compared to paying monthly premiums.
  • Rely on cover through your super fund: many super funds in Australia offer life insurance policies as part of their superannuation packages which are often cheaper than policies purchased from specialist insurers. However, the cover offered generally comes with a lower maximum, so it’s important to consider if it provides you with the protection you and your family need.
  • Remove indexation from your policy: choosing a policy without indexation or inflation-proofing means that your coverage amount won’t automatically increase with inflation. This can lead to lower premiums, but it could lead to your covered amount diminishing in value by the time you pass away.
  • Compare policies: shopping around and comparing policies from different insurers can help you find the most suitable coverage for your needs at a lower cost.

How can buying life insurance while I’m young help me reduce the cost of my policy?

Life insurance premiums are calculated based on risk, and (generally) younger people are considered less risky than older individuals. When you're young and healthy, you're less likely to have pre-existing medical conditions which could increase the cost of your premiums. Additionally, younger individuals have longer life expectancies on average, which means the insurance company is less likely to have to pay out a claim anytime soon.

Another advantage of buying life insurance at a younger age is that you may be able to lock in a lower premium rate for the duration of your policy. This means that as you age and your risk increases, your premiums will remain the same (which is the case with level premiums). By contrast, if you wait until you're older to buy life insurance, you may have to pay a higher premium rate due to your increased risk, which can make your policy more expensive over time.

Frequently asked questions about how to reduce life insurance premiums

How can stepped or level premiums reduce the cost of my life insurance premiums?

Stepped premiums start out cheaper, meaning they’re the most affordable option for young people, but increase with age. Level premiums stay the same throughout the policy term, which typically means they’re cheaper by the time you reach your senior years. It’s important to consider which is the most suitable premium option for your needs before you buy your policy.

Will having a medical before buying life insurance reduce my premiums?

Having a medical check-up and presenting the results to your insurer can help show that you're in good health and taking steps to manage any existing health conditions. If you’re in good health and haven’t taken a medical, you may be paying more for your coverage than you otherwise would had you undergone an exam prior to your policy purchase.

Do any insurers offer discounts on their life insurance policies?

Some insurers may offer discounts on their life insurance policies, such as for bundling multiple policies (as mentioned) or simply to incentivise new customers to sign up. If you’re looking at a policy with a sign-up deal, make sure the terms are suitable beyond the scope and period of your discount, as it may not necessarily be the best option for you.

Can changing my job reduce my premium?

Yes – if you’re working in a job your life insurer considers risky, switching to a less risky job can reduce the cost of your premiums. For instance, a doctor or nurse may pay more for insurance due to the exposure to disease, dangerous equipment and hazardous materials, but if they switched to an office-based job with fewer risks attached, they’d likely see a reduction in their premiums.

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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.