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How much does life insurance cost?
Life insurance can give you and your family financial peace of mind if something were to happen to you, but how much does it cost?
27 June 2024
Life insurance can give you and your family financial peace of mind if something were to happen to you, but how much does it cost?
Key points:
- The average annual direct life insurance premiums for non-smokers in their 30s is $360.12 for women and $479.76 for men.
- Premiums for 5-Star Rated life insurance policies can be up to 54% cheaper than the market average.
- Some life insurers offer discounts and other special offers to new customers.
What does life insurance cost?
The cost of life insurance in Australia can vary and depends on a variety of factors. These can include your age, sex, certain lifestyle choices (such as whether or not you smoke) and how much insurance you’re taking out.
Men will generally pay more than women for life insurance. According to Canstar’s latest research, a non-smoking woman in her 30s would pay just under $30 a month on average for a direct life insurance policy with a benefit of $500,000. In comparison, a non-smoking man in his 30s would pay nearly $40 a month on average for the same amount of cover.
To give you an idea of life insurance costs for men and women of different age groups and smoking statuses, Canstar has calculated the average monthly premiums across the life insurance providers we rate.
Average monthly direct life insurance premiums by age
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| Age | Female | Male | ||
|---|---|---|---|---|
| Non-Smoker | Smoker | Non-Smoker | Smoker | |
| 20s | $29.23 | $52.52 | $44.38 | $77.29 |
| 30s | $30.01 | $56.15 | $39.98 | $78.10 |
| 40s | $53.31 | $110.13 | $65.60 | $145.35 |
| Early 50s |
$107.12 | $230.21 | $140.52 | $317.74 |
| Late 50s |
$194.48 | $387.57 | $270.47 | $559.76 |
Source: www.canstar.com.au. Based on quotes obtained for Canstar’s 2024 Direct Life Insurance Star Ratings (April 2024). Based on a sum insured value of $500,000.
It’s important to note that price isn’t everything. If you decide to take out life insurance, you should also consider the type of life insurance available, the level of cover and whether any exclusions apply. You might also consider whether you can bundle your life cover with total and permanent disability (TPD), trauma or income protection cover.
If it looks like you may be paying too much for your life insurance, or you think you’re not getting enough coverage for your premiums, it may be time to shop around. Canstar’s Direct Life Insurance Star Ratings compare both the cost and features of the direct life insurance products in our database. By choosing a 5-Star Rated product, you may be able to save money on your monthly life insurance premium.
Average monthly savings on premium costs with Canstar’s 5-Star Rating direct life insurance policies
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| Age | Gender |
Smoking |
5 Star |
Rest of the |
Saving |
|---|---|---|---|---|---|
| 20s | Women | Non-smoker | $20.22 | $32.83 | $12.61 |
| Smoker | $27.60 | $66.37 | $38.77 | ||
| Men | Non-smoker | $32.65 | $49.07 | $16.42 | |
| Smoker | $44.94 | $90.23 | $45.29 | ||
| 30s | Women | Non-smoker | $20.94 | $33.06 | $12.12 |
| Smoker | $31.95 | $65.71 | $33.76 | ||
| Men | Non-smoker | $26.51 | $45.37 | $18.86 | |
| Smoker | $47.65 | $90.28 | $42.63 | ||
| 40s | Women | Non-smoker | $31.69 | $61.96 | $30.27 |
| Smoker | $59.22 | $130.49 | $71.27 | ||
| Men | Non-smoker | $37.09 | $73.37 | $36.28 | |
| Smoker | $86.67 | $168.82 | $82.15 | ||
| Early 50s |
Women | Non-smoker | $66.00 | $118.34 | $52.34 |
| Smoker | $134.71 | $256.25 | $121.54 | ||
| Men | Non-smoker | $88.73 | $154.64 | $65.91 | |
| Smoker | $197.85 | $350.43 | $152.58 | ||
| Late 50s |
Women | Non-smoker | $121.02 | $2166.51 | $95.49 |
| Smoker | $246.42 | $429.91 | $183.49 | ||
| Men | Non-smoker | $177.81 | $298.27 | $120.46 | |
| Smoker | $382.85 | $612.83 | $229.98 |
Source: www.canstar.com.au – 21/06/2024. Based on the Canstar 2024 Direct Life Insurance Star Rating (April 2024). Monthly premiums are based on a cover amount of $500,000.
Compare Life Insurance with Canstar
If you’re comparing life insurance policies, the comparison table below displays some of the policies currently available on Canstar’s database for a 30-39-year-old non-smoking male working in a professional occupation. Please note the table is sorted by Star Rating (highest to lowest) followed by provider name (alphabetical) and features links direct to the providers’ websites. Consider the Product Disclosure Statement (PDS) and Target Market Determination (TMD), before making a purchase decision. Contact the product issuer directly for a copy of the PDS and TMD. Use Canstar’s life insurance comparison selector to view a wider range of policies. Canstar may earn a fee for referrals.
What factors can affect my life insurance premiums?
The cost of life insurance typically depends on a range of factors, including some you can control and some you can’t. A provider will generally consider:
- your age
- your sex
- your smoking status
- your current health and medical history
- your occupation and any associated risks
- your personal pastimes and hobbies
- how you purchase your cover (e.g. directly from an insurer, via a financial adviser or as part of your superannuation)
- the type of cover you get (e.g. if you bundle life cover with TPD, trauma cover or income protection)
- the amount of cover you take out.
You might like to use Canstar’s Life Insurance Calculator to get an estimate of how much cover you may need.
Your insurer may give you the option of choosing between stepped or level premiums. Stepped premiums increase each year as you age and become statistically more likely to make a claim. Level premiums stay the same over time, but may initially be more expensive.
How can I make my life insurance premiums cheaper?
If you’re looking for ways to manage the cost of your life insurance, a good place to start is to shop around and compare products from a variety of providers. Some life insurers offer discounts and other special offers to new customers. For example, you might be able to get a discount if you pay your premiums annually instead of monthly, or if you take out a joint policy.
It may also be a good idea to review your policy from time to time. Check the level of cover you have is suitable for your specific situation and that you’re not paying for more than you need. Canstar’s Research Team has crunched the numbers and by choosing a 5-Star Rated product, you can save up to 54% on your premiums compared to the market average.
You may also already have life insurance through your super, as many funds automatically provide members with death and TPD cover. It’s worth checking that you are not unnecessarily doubling up on your cover. Cover through your super can be cancelled if you wish to take out a policy from a different provider.
How does my job affect my life insurance?
Any default life insurance you have through your super should not be affected by your job, regardless of how high-risk or hazardous it is. However, life insurance providers generally consider dangerous jobs or risky hobbies to be red flags. This means life insurance outside of super will generally charge higher premiums for certain occupations.
The Financial Services Council, which sets the standards for the life insurance industry, has released an enforceable standard (FSC Standard No. 27) that removes occupational exclusions and occupation-based restrictive disability definitions in default life insurance cover in superannuation. The aim is to make sure people are able to claim on default group life insurance cover even when they change jobs and are stapled to a fund under the Australian Government’s recent Your Future, Your Super reforms. But this standard does not apply to life insurance outside of your super.
Real Insurance lists some common high-risk jobs and the reason why that may affect a policy. They include:
- a miner working underground and around large, dangerous machinery
- a construction worker, especially one handling dangerous machinery or on multi-storey building sites
- a person serving in the armed forces, whether it’s the army, navy or air force
- a doctor or nurse as healthcare workers are more frequently exposed to diseases.
Fellow life insurer NobleOak says your level of risk may depend on whether you’re a white-collar or blue-collar worker. It gives the example where a window cleaner working at heights or a miner working underground could be exposed to a higher level of risk than an accountant, teacher or other white-collar professional. “Some occupations may be uninsurable for certain covers such as abattoir workers or someone in the armed services dealing with special hazards,” it adds.
If you work in a profession that your life insurer considers dangerous, you may need to consider seeking some additional income protection.
Compare Income Protection Insurance
If I quit smoking will it reduce my life insurance premiums?
If you’re a smoker and you’re able to quit, this could reduce your life insurance premiums considerably, in addition to any health insurance costs.
If you’ve kicked the habit for good, consider contacting your life insurance provider to ask them how to change your smoking status to non-smoker. Keep in mind that an insurance company will generally consider you a non-smoker if you have not smoked in the last 12 months. This can vary between insurers so you may want to check your product disclosure statement (PDS) or speak to your provider to confirm.
There can also be consequences for not disclosing to your insurer that you smoke, even if it’s only occasionally.
Read more: What does life insurance cost for a smoker?
Are my life insurance premiums tax-deductible?
Unfortunately, you can’t claim a tax deduction for any life, trauma or critical care insurance premiums. The on advises that premiums paid under a policy to compensate you for things such as a physical injury are not tax-deductible.
In contrast, you are able to claim on any premiums you paid for insurance against the loss of your income (such as income protection insurance). But you must include any payment you received under the policy in your tax return.
If you’re looking to take out life insurance, you can compare a range of direct life insurance products on Canstar’s database.
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Image source: NDAB Creativity/Shutterstock.com
This article was reviewed by our Content Editor Alasdair Duncan before it was updated, as part of our fact-checking process.
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