Life insurance in Australia is a type of insurance designed to protect your loved ones financially when you pass away.
Upon your death, your beneficiaries or your estate will be paid a lump sum amount according to the sum insured as outlined in your life insurance policy.
This money can be used to pay off any outstanding debts, your mortgage, funeral costs, and can be given to family or friends as seen fit.
Types of life insurance Australia wide
The main type of life insurance available in Australia is Term Life Insurance. As the name states, term life insurance is offered for a set term, usually until the age of 99.
Life insurance premiums are paid either annually or monthly in exchange for protection if your premiums are not paid you are no longer protected.
It should be noted that Whole of Life Insurance and Universal Life Insurance is no longer available in Australia.
Who should buy life insurance policies?
If you have family or friends that you would like to be taken care of financially when you pass away, then life insurance is imperative.
You may also need cover if you have a number of outstanding debts like a mortgage or other personal loans. Ask yourself if you fit into either of these categories, and if so life insurance is essential to the financial protection of your loved ones.
How much life insurance coverage should I have?
The amount of coverage you need will depend on a number of factors, like the amount of mortgage or personal debt you have, the age of your children if any, and the amount of income your family will need in your absence.
In the least you will want enough cover to pay for the mortgage, your funeral, and enough income for your children until the age of 18. If you would like to leave more funds for other relatives or friends then this will need to be factored in as well.
As a rule of thumb, many financial advisors will recommend that the sum insured for in your life insurance policy should be a minimum of ten times your annual salary. However this amount will vary as everyone’s situation is different.
Cost considerations when making a life insurance comparison
The cost of premiums varies on a number of individual factors. Insurers will base standard premiums on the following:
- Smoking status; and
In assessing your rates, an insurer may also ask for a medical examination. This assessment is done at the expense of the insurer.
It is important to note that insurers who ask minimal questions and sell cover without medical assessment often have higher premiums.
If you are seeking cheap life insurance premiums then it may be best to seek a company who does ask a lot of questions and completes a comprehensive medical disclosure statement. Doing this generally results in lower premiums without compromising on the quality of life cover.
xLife also offers a 20% rebate on your first year’s life insurance premium giving you even greater savings.
Who will get my life insurance proceeds?
Most life insurance policy contracts allow the life insurance policy owner to nominate a beneficiary, or beneficiaries to receive any life insurance policy benefit payments. A life insurance company cannot ignore or overturn this nomination as it binds the life insurance company to pay the nominated beneficiary, or beneficiaries.
You can nominate up to five beneficiaries in a life insurance policy and these beneficiaries can be amended by the policy owner at any time should you wish to change your beneficiary.
Having your life insurance policy correctly set up will ensure that your proceeds will end up in the right hands.
Advice on life insurance quotes
If you need help on which policy to go with, speak to an xLife adviser today. xLife offers free comparisons of Australia’s top policies.
xLife also specialises in difficult to cover situations like life insurance for:
- Australian expats
- Non residents
- Pre-existing medical conditions like sleep apnea, cancer and diabetes
We anlayse your particular situation, compare quotes available on the Australian market. We then recommend a policy best suited to your personal situation.