Life Insurance Comparison

Life Insurance FAQs

What is life insurance?

When you take out a life insurance policy, you are provided with peace of mind that your or your loved ones will be cared for financially in the event of your death.

If you have dependents who rely on your income, either fully or partially, to pay household bills and other expenses, then life insurance may be right for you.

Life insurance pays out a lump sum to your beneficiaries if you die or become terminally ill while covered by your policy. This lump sum can be used to cover debts, essential bills, as well as to protect and maintain your family’s lifestyle outside of the essentials.

You choose the amount of cover that you need based on a variety of factors such as current income, debts, mortgage and other household expenses. To help you get an understanding of the cover you might need, get started with our life insurance calculator.

It’s important to have adequate cover in place, so you can have peace of mind that your family aren’t burdened with unexpected costs should you pass away.

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Why do I need life insurance and income protection?

We are often asked the difference between life insurance and income protection — is one sufficient or should you be taking out both? There are some very clear differences between the two types of insurance and one or both may be suitable depending on your personal circumstances.

When you have a life insurance policy, your beneficiary (the person chosen by you to receive the benefit) will receive a lump sum payment should you die or become terminally ill. This payment can help cover funeral costs, mortgage repayments, debts and everyday expenses. It can help your family cope financially during a difficult time.

Income protection insurance provides you with up to 70% of your income if you become unable to work due to illness or injury for an extended period of time. It provides you, and your loved ones, with peace of mind that you can still continue to cover your ongoing costs if you are not able to earn an income.

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How much cover do I need?

The amount of life insurance cover you need depends on a variety of personal factors including age, income, dependents, debts and lifestyle — there is no one-size-fits-all solution. If you have too little cover your loved ones may not be adequately protected if they need to claim, and having too much can mean you are paying more than you need to in premiums.

The first thing to consider are the needs of your family and dependents – how much do they need to maintain their current lifestyle and not be financially disadvantaged if you were to die or be diagnosed with a terminal illness?

If you’re the main income earner, you may be covering costs such as a mortgage, other loans, school fees and everyday expenses. These costs can quickly add up and cause significant stress if your loved ones were unable to continue to make these payments in the event of your death.

Your life insurance cover should not only be able to cover the immediate needs of your family but their future needs too. How much do they need to maintain their current lifestyle? You can use our life insurance calculator to get an idea of how much cover you might need and start your comparison.

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How will my health affect my life insurance application?

If you have a pre-existing medical condition, it does not mean that you can’t take out life insurance. Every application for life insurance through Lifebroker is individually assessed by an underwriter to understand your cover options based on a range of factors including your current health and lifestyle.

Although some people may have a pre-existing medical condition they may still be able to take out life insurance. Rather than simply declining your cover, the insurer may apply a premium loading or exclude a particular condition on your policy, so you can still have cover in place for your family.

As part of your duty of take reasonable care not to make a misrepresentation, it is important that you take care to answer the insurer's questions truthfully when applying so you don’t have any nasty surprises when you or your family need to make a claim.

Before your insurance application is approved, the insurer will generally take into account a variety of personal factors including age, health, lifestyle and your health to offer the right cover, without over-promising to their clients.

For more information, contact one of our insurance consultants on 13 54 33 or if you’re ready to compare life insurance, visit our comparison tool now.

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Are life insurance premiums tax deductible?

The tax treatment of life insurance, income protection and TPD insurance differ depending on the policy and cover you have taken out.

Income protection premiums are tax deductible in Australia as they are treated as assessable income when you claim a benefit. However, this may vary depending on the structure of your policy, for example, if your policy is held through superannuation.

Life insurance can be a bit more complicated when it comes to tax time. Depending on your policy, and whether it’s held privately or through your superannuation fund, your premiums may or may not be tax deductible. The same applies to TPD and trauma insurance. It is best that you read your Product Disclosure Statement carefully and speak to a tax specialist to get a better understanding.

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How can I decide which cover type or product is right for me?

At Lifebroker we don’t compare different life insurance policies solely on price, we also provide you with a snapshot of the different product features and an overview of each company on size and claims paid. This information can help you make a confident decision about what insurance suits you. Get started with your life insurance comparison to find out more.

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What is underwriting in insurance?

There are different types of underwriting. The two that mainly concern life insurance are medical underwriting and financial underwriting. When applying for life insurance products, you will need to complete an application form. Most comprehensive products will require you to complete a series of questions regarding your health and financial history. Insurance companies will also require information about your work and any sports and pastimes that you might participate in.

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What's the difference between private health and life insurance?

A lot of people tend to compare health insurance and life insurance to try and decide between the two. However, when you look at the two types of insurance closely, you'll see it shouldn't be a matter of deciding which one you need, as they...

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Are blood tests required for life insurance?

Generally, no blood tests are required when applying for life insurance cover. However, upon application if there is something that the insurance company is concerned about and they want to further investigate, the insurance company may request blood tests to be completed.

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What's the difference between life insurance and loan or mortgage protection insurance?

Loan protection insurance is offered by a few companies and generally only covers loan repayments if you’re unable to work or if you pass away. On the other hand, life insurance and income protection provide further options to protect your lifestyle not just your loan. More...

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What are variable age-stepped and variable premiums?

When choosing an insurance policy there are two main premium structures to choose from including:

Variable Age-stepped Premium (previously known as “Stepped Premiums”):

Choosing a Variable Age-stepped premium structure means that your premiums will be calculated based on your age each year and will generally increase each year on the policy anniversary. Variable age stepped premiums typically start off cheaper than variable premiums, however, increases are typically more significant as you get older.

Variable Premium (previously known as “Level Premiums”):

Choosing a Variable Premium structure means that the premium is based on your age when you commence your policy, with the insurer attempting to spread the cost of cover over a number of years. Variable premiums will generally be more expensive than variable age stepped premiums initially, however, may be lower at some point in the future depending on how long you hold the policy.

Neither Variable Age Stepped or Variable premium structures are fixed and the cost of cover will increase overtime if the benefit amount increases, the insurer updates their premium rates, discounts no longer apply, or in response to government charges. Should your benefit amount increase e.g. due to inflation protection or upon your request to increase the benefit amount, the cost of cover will be priced based on your age at the date of increase. The increased benefit amount will generally be subject to a higher premium rate than the original cover.

To learn more about the different premium structures you can refer to the Council of Australian Life Insurers (CALI) Life insurance premium fact sheet. The options available vary between insurers, so it’s important to also read the product disclosure statement for details on each insurers offering.