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. If you’re thinking about buying life insurance, one important factor to consider is its cost.

What does life insurance cost?

The cost of life insurance depends on a variety of factors that can include your age, your gender and whether or not you smoke. Typically, males will pay more for life insurance than females. For example, according to Canstar’s research, a non-smoking woman in her 30s would pay about $35.49 per 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 approximately 30% more ($46.35 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
Female Male
Age Non-smoker Smoker Non-smoker Smoker
20s $32.71 $52.39 $48.53 $77.69
30s $35.49 $59.09 $46.35 $84.30
40s $64.22 $118.08 $79.92 $163.54
Early 50s $123.10 $224.40 $164.84 $330.82
Late 50s $204.31 $355.57 $302.45 $579.45
Source: Table prepared 27/05/2020. Data from the Canstar 2020 Direct Life Insurance Star Ratings (May 2020). Monthly premiums based on $500,000 of cover.

A recent survey by insurance provider NobleOak found that cost is the most significant factor for Australians buying life insurance. Of the 1,000 respondents, 79.5% said the cost of the premium was one of the most important factors. This was ahead of product features (58.5%), claims reputation (58.3%) and service levels (30.8%).

However, 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 (for example, whether you bundle your life cover with 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 shave money off your monthly life insurance premium. For example, according to Canstar’s research, a non-smoking female in her 40s could save $28.47 a month on average by choosing a 5-Star rated life insurance policy, compared to a non-5-Star rated policy.

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. Use Canstar’s life insurance comparison selector to view a wider range of policies.

What factors can affect life insurance premiums?

The cost of life insurance typically depends on a range of factors, which can include:

  • Your age
  • Your gender
  • 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 you make your life insurance premiums cheaper?

Dangerous occupations or risky hobbies are often red flags to insurers. Therefore, avoiding lifestyle choices viewed as “risky” by insurers may help slice a chunk off your monthly life insurance premium. But changing your occupation or hobbies could involve a large commitment and sacrifice, and therefore is unlikely to be an attractive option for everyone.

If you’re looking for other ways to manage the cost of your life insurance, shopping around a variety of providers could be a good place to start. Some life insurers also offer discounts and other special offers to new customers.

It’s also important to check what insurance you already have through your super. Many funds automatically provide members with death and TPD cover so it could be worth checking you are not unnecessarily doubling up on your cover.

It can also be a good idea to review your policy 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.

If you’re a smoker and you are able to quit, this could also shave money off your premiums.

Smoking can double life insurance premiums

According to the Australian Bureau of Statistics, just under one in seven (13.8%) adults smoked daily in 2017-2018, and a further 1.4% people reported smoking on less than a daily basis. While being a smoker doesn’t tend to affect your ability to get life insurance coverage, it can have a significant impact on how much you pay in premiums. As we’ve seen in the table above, smokers tend to pay more for life insurance than non-smokers.

Males in particular are hit with a higher premium ‘loading’ (or surcharge on top of the standard premium) for lighting up. For example, according to Canstar’s research, a male smoker in his 30s pays $84.30 on average for direct life insurance (based on $500,000 of cover). In comparison, a non-smoking male in his 30s pays $46.35 a month on average – 45% less. For women of the same age group, the research also showed average premiums for non-smokers were around $23.60 a month (40%) cheaper than for smokers.

If you were a smoker when you signed up for life insurance and have since quit, consider contacting your life insurance provider to ask them how to change your smoking status to non-smoker.

Keep in mind that generally an insurance company will consider you a non-smoker if you have not smoked in the last 12 months. This can vary between insurers, however, so you may want to check your PDS or speak to your provider to confirm.

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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