How much does life insurance cost?
28 June 2023
Life insurance can give you and your family financial peace of mind if something were to happen to you. If you’re thinking about buying life insurance, one important factor to consider is the cost. We take a look.
Key points:
- Some life insurers offer discounts and other special offers to new customers.
- You could save on premiums if you avoid career and lifestyle choices that are viewed as risky.
- Review your policy from time to time to make sure you’re not paying for more than you need.
What does life insurance cost?
The cost of life insurance in Australia depends on a variety of factors that 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.
For example, according to Canstar’s latest research, a non-smoking woman in her 30s would pay about $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 $41 a month on average for the same amount of cover, based on the policies considered in our latest Star Ratings.
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 | $29.52 | $52.32 | $45.14 | $78.87 |
| 30s | $30.01 | $56.15 | $40.76 | $79.58 |
| 40s | $54.21 | $111.34 | $66.33 | $147.48 |
| Early 50s | $109.16 | $234.00 | $144.59 | $322.91 |
| Late 50s | $197.87 | $392.77 | $279.00 | $576.52 |
Source: www.canstar.com.au. Based on quotes obtained for Canstar’s 2023 Direct Life Insurance Star Ratings (May 2023). Based on a sum insured value of $500,000.
It’s important to note that price isn’t everything. If you do decide to take out life insurance, you might also like to consider the type of life insurance available (e.g. whether you bundle your life cover with total and permanent disability (TPD), trauma or income protection cover), the level of cover and whether any exclusions apply.
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.
For example, according to Canstar’s research, a non-smoking woman in her 30s could save $13.20 a month (or $158.40 a year) on average by choosing a 5-Star Rated life insurance policy, compared to a non-5-Star Rated policy. Likewise, a non-smoking man in his 40s could save $35.42 a month (or about $425.04 a year) on average.
5-Star Rated advantage on average monthly direct life insurance premiums
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| Age | Gender | Smoking status |
5 Star Rated |
Rest of the market |
Saving |
|---|---|---|---|---|---|
| 20s | Women | Non-smoker | $21.41 | $33.30 | $11.89 |
| Smoker | $28.18 | $65.88 | $37.70 | ||
| Men | Non-smoker | $33.52 | $48.41 | $14.89 | |
| Smoker | $46.13 | $89.20 | $43.07 | ||
| 30s | Women | Non-smoker | $20.99 | $34.19 | $13.20 |
| Smoker | $32.66 | $65.41 | $32.75 | ||
| Men | Non-smoker | $26.01 | $43.52 | $17.51 | |
| Smoker | $48.68 | $90.06 | $41.38 | ||
| 40s | Women | Non-smoker | $32.11 | $62.35 | $30.24 |
| Smoker | $60.63 | $132.28 | $71.65 | ||
| Men | Non-smoker | $38.23 | $73.65 | $35.42 | |
| Smoker | $88.79 | $172.19 | $83.40 | ||
| Early 50s | Women | Non-smoker | $68.22 | $119.58 | $51.36 |
| Smoker | $138.94 | $260.91 | $121.97 | ||
| Men | Non-smoker | $93.38 | $157.52 | $64.14 | |
| Smoker | $204.24 | $356.78 | $152.54 | ||
| Late 50s | Women | Non-smoker | $125.24 | $218.27 | $93.03 |
| Smoker | $253.56 | $429.92 | $176.36 | ||
| Men | Non-smoker | $187.85 | $301.06 | $113.21 | |
| Smoker | $393.96 | $615.62 | $221.66 |
Source: www.canstar.com.au – 26/06/2023. Based on the Canstar 2023 Direct Life Insurance Star Rating (May 2023). 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 things such as:
- 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, for example, 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, while level premiums stay the same over time, but may be more expensive to take out initially.
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 to make sure the level of cover you have is suitable for your specific situation and you’re not paying for more than you need.
It’s also important to check what insurance you may already have through your super. Many funds automatically provide members with death and TPD cover, so it’s worth checking that you are not unnecessarily doubling up on your cover.
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.
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.
The standard was introduced in December 2021 with a transitional period. The FSC expects to see all occupational exclusions in default group life insurance removed by the end of 2023.
The standard doesn’t apply to any direct life insurance cover you may seek separately where dangerous jobs or risky hobbies can be red flags to insurers.
If you avoid career and lifestyle choices that are viewed as risky that may help reduce your life insurance premiums, but this may not suit your chosen lifestyle.
You might need to shop around to see what conditions or exclusions may be imposed by any provider you are considering.
For example, 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 doctor or nurse as healthcare workers are more frequently exposed to diseases.
Fellow life insurer NobleOak says any insurance cover 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.
You may need to consider seeking some additional income protection if you work in a profession your life insurer considers dangerous.
If I quit smoking will it reduce my life insurance premiums?
If you’re a smoker and you are able to quit, this could reduce your life insurance premiums considerably, in addition to any health insurance costs. The tables (above) show the difference between monthly premiums for a smoker and non-smoker.
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 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?
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Are my life insurance premiums tax-deductible?
Unfortunately you can’t claim a tax deduction for any premium you pay for a policy to compensate you for things such as a physical injury, and the Australian Taxation Office says that includes life insurance.
If you’re looking to take out life insurance, you can compare a range of direct life insurance products on Canstar’s database.
Image source: NDAB Creativity/Shutterstock.com
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This article was reviewed by our Deputy Editor, Canstar Amanda Horswill before it was updated, as part of our fact-checking process.
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