Comparing life insurance policies can provide assurance in knowing you’ve picked the right policy for you and your family.
There are a few key things to consider when comparing insurers. Lean what these factors are and how to compare life insurance before choosing a policy to protect yourself and your loved ones.
What type of life insurance do you need?
There are different types of insurance that can cover you or your family if you become seriously ill, injured, or pass away. Before comparing policies, you should think about which types of insurance you need.
- Life insurance — Also known as ‘death cover’, this type of insurance can provide a lump sum payout to the people who depend on you if you were to pass away.
- Total and permanent disability (TPD) insurance — TPD can provide you with a lump sum payment if you become permanently ill or injured to ever work again.
- Trauma insurance — Also known as ‘critical illness insurance’, this cover can provide financial support if you are diagnosed with a critical illness as defined by the policy.
- Income protection — Income protection can pay you a portion of your regular monthly income if you can’t work for an extended period due to illness or injury.
Once you’ve decided which types of insurance you need, you can compare policies that are available from different insurers. Comparing helps you work out what could be suitable, what you could be covered for, and the premium prices for different levels of cover.
Choose whether you prefer a Variable Age-stepped premium or Variable premium
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.
Most variable premiums will revert to a variable age stepped premium at your policy anniversary around the ages of 65 or 70, depending on the insurer.
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.
Choose your amount of cover
It’s important to select the right cover for your needs. You’ll need to think about the costs you would need to cover if you were no longer able to earn an income or pass away. These could include debts, rent or mortgage repayments, daily living expenses, care and education costs. Our calculator can help you work out how much these expenses could be.
How to compare life insurance with Lifebroker
Once you’ve worked out which type of insurances you need, your preferred premium structure and how much cover you’d like, it’s time to compare policies. There are a lot of options out there, and looking for a policy that suits you, your family and your loved ones can seem like a daunting task. You can start by reading our tips for buying life insurance. Our comparison tool can then ease the selection process and help you make sense of what’s available.
It’s not all about the price
When it comes to life insurance, cheaper isn’t necessarily better. It’s good to be mindful of this when you’re comparing life insurance products. While price is an important consideration, it can change from year to year while you hold your policy, and you should also look at policy features and benefits — you may find you’re willing to pay a little extra if you’re covered for more. You should also check whether the policy has any exclusions that you wouldn’t be covered for in the event you needed to claim.
Exclusions are the things that your insurance policy won’t cover, like certain injuries, illnesses, or hazardous pastimes or dangerous types of work. Some exclusions may apply for the term of the policy, but others may be reviewable. For example, an insurer that won’t cover a recently broken leg initially might consider reviewing the exclusion later on. It’s best to check the insurer’s product disclosure statement (PDS) for details on what your benefits and exclusions include. If you need coverage for something specific, you can speak with your Lifebroker consultant to understand your options with some of Australia’s leading life insurers.
We’re here to help
If you’d like to ask someone how to compare life insurance products, or need a hand making sense of your options, our consultants are here to help. You can call us on 13 54 33, Monday–Friday, 9am–5:30pm (AEST/AEDT).