Life Insurance Comparison

Source: www.canstar.com.au. Based on quotes obtained for products rated in the Canstar 2026 Direct Life Insurance Star Rating (May 2026). Monthly premiums are based on a cover amount of $500,000.

How to compare life insurance

When comparing life insurance policies, check the policy’s Product Disclosure Statement (PDS) and consider:

• The cost of a policy and how you’re paying your premiums (i.e., age-stepped or variable premiums or as a fee charged by your super fund).
• The insured events you’re covered for and if you can choose any optional extras.
• What the benefit or sum insured amount is, how it’s paid out, and how long for—in the case of income protection and TPD.
• What waiting periods apply (how long you have to hold the policy before making a claim).
• The exclusions a policy has, including whether pre-existing medical conditions will be covered.
• If you have a family history of certain illnesses, does the policy cover them?
• If you’re looking at the table above, what is the policy’s Star Rating, with 5-Star policies offering outstanding value to Australian consumers.

How does life insurance work?

Taking out life insurance usually involves a few key steps:

Applying for cover

Once you’ve chosen the type of life insurance you want, you’ll need to apply for a policy. If you’re applying directly with an insurance provider or through an adviser, you’ll usually go through a process called underwriting. This typically involves answering questions about your health and lifestyle, such as your age, occupation, whether you smoke, and the activities you take part in. It’s important to answer honestly, as incorrect information could affect a future claim.

Choosing your cover amount

You’ll also need to decide on the sum insured, which is the lump sum that could be paid if a claim is approved. Life insurance through superannuation often comes as ‘default’ and may not require you to answer a medical questionnaire or undergo testing. However, you may still have the option to adjust your benefit amount or apply for additional cover.

Paying your premiums

Your insurer will set a premium based on the information you provide. This is the amount you’ll need to pay to keep your policy active. Many policies use age-stepped premiums (formerly ‘stepped’ premiums), which generally increase as you get older. Some insurers offer variable premiums (formally ‘level’ premiums), which stay more consistent over time but usually start out being more expensive. In some cases, insurers may also exclude certain pre-existing medical conditions from cover.

Insider tip: Age-stepped vs variable premiums

Age-stepped premiums start low but increase as you age, while variable premiums set a fairly consistent price from the start. Age-stepped might seem like a no-brainer early on, but costs can skyrocket later in life. If you’re in it for the long haul, weigh up whether variable premiums might actually save you money down the track.

Claiming if an insured event occurs

Once your policy is active and you’ve served relevant waiting periods, you or your beneficiaries can make a claim if an insured event occurs, such as death or terminal illness, in line with the policy terms. Your policy will also come with a cooling-off period (usually between 14 and 30 days), during which you can cancel the policy and receive a full refund.

What is a life insurance beneficiary?

A beneficiary is a dependant you nominate to receive a life insurance payout if you were to make a claim. A dependant for life insurance terms can include:

• A spouse
• A child 
• Someone you live with
• Someone who relies on you for financial support
• Your Legal Personal Representative (LPR), who is usually the executor or administrator of your estate

Simply naming someone in your Will doesn’t necessarily mean they’ll receive your life insurance payout. Generally speaking, if you want your payout to be distributed from your estate, you’ll need to nominate either your legal personal representative or estate as your beneficiary. 

This is similar to life insurance provided through super, where you’ll also need to nominate a beneficiary. You can do so in two ways:

• Non-binding nomination: This is usually the default option, acting as a suggestion to the super fund trustee (the person or company managing the super fund) when they’re deciding who receives the payout. In this case, the super fund trustee may have the discretion to pay the benefit to whoever they deem to be your legal dependants, which can lead to complex family situations.
• Binding nomination: The trustee must pay the benefit to your nominated person, as long as they’re considered a legal dependant as outlined above. Binding nominations may lapse every three years, so it’s important to review your nomination to ensure it hasn’t lapsed.

What is a life insurance exclusion?

An exclusion is an event or situation in which your policy will not cover you. Common exclusions in life insurance are:

• Dangerous occupations where injury or death may be more likely to occur, like being a truck driver, arborist, or construction worker
• Partaking in high-risk hobbies like skydiving, hang-gliding, or motor racing
• Claims arising from suicide or self-harm (there may be a 12- to 24-month waiting period associated with claims of this nature)
  If you or a loved one are experiencing mental health challenges or distress, free support is available through Lifeline (13 11 14) or the Suicide Call Back Service (1300 659 467)
• Illegal or criminal actions that result in a claim
• Claims arising from reckless or negligent behaviour like dangerous driving or ignoring Government warnings
• Certain pre-existing medical conditions, especially those not disclosed to your insurer
• Claims arising from substance abuse
• Not paying your premiums, which would lead to your cover lapsing
• Travelling to high-risk locations, especially those with a Smartraveller advice level of ‘Do not travel’
• Acts of war or terrorism

Additionally, if you provide false or misleading information to your insurer, it might reject your claims or cancel your policy entirely.

Check your policy’s PDS for more information on what is and isn’t covered.

What are pre-existing conditions in life insurance?

A pre-existing medical condition is one you’ve been treated for or have shown symptoms of in the past. Even if your condition has been successfully treated, you’ll still need to disclose it to your potential life insurer. Different insurers may define pre-existing medical conditions in different ways, so it’s worth contacting your chosen insurer to find out how they define them.

Examples of pre-existing medical conditions

• Arthritis
• Asthma
• Cancer
• Diabetes
• Heart Disease
• High blood pressure
• High cholesterol
• Kidney or live disease
• Melanoma
• Mental health conditions (including anxiety and depression)
• Musculoskeletal conditions
• Sleep apnoea
• Stroke

Examples of medical conditions that may not be considered pre-existing

• Injuries that you’ve fully recovered from like broken bones or torn ligaments
• Minor colds and flu
• Minor surgeries like wisdom teeth extractions
• Non-chronic skin conditions like mild eczema or acne
• Routine pregnancies

Can you apply for life insurance with a pre-existing medical condition?

You may still be able to take out life insurance even if you have a pre-existing medical condition, but it will depend on your insurer. In some cases, they may ask you to undergo a medical examination to better understand the risks associated with your condition. 

When applying with a pre-existing medical condition, an insurer may choose to:

• Cover your pre-existing condition
• Exclude the condition from coverage, meaning claims arising due to the condition may be denied
• Cover the condition at an increased premium
• Impose a waiting period before claims relating to the condition can be made
• Deny you coverage

If you have default life insurance provided by your super fund, your pre-existing medical conditions may be covered automatically without you needing to undergo a medical examination.

What optional extras can you get with life insurance?

Life insurance comes with optional forms of cover you can add to your policy—usually for an additional premium. These can include:

• Accidental death benefits: Provides an additional benefit to your beneficiaries if your death is caused by an accident.

• Buy back options: If you have a linked policy, for example a policy that includes both term life and TPD, and make a claim on your TPD cover, your life cover benefit amount will usually drop by the same amount. A buy back allows you to reinstate your original amount, usually 12 months after a claim, without needing to undergo a new medical exam.

• Children’s cover: Offers a lump sum if a dependant child passes away or is diagnosed with a specified critical illness like cancer or major organ failure.

• Waiver of premiums: Waives future premiums if you become totally disabled and unable to work.

Insider tip: You may be able to increase your cover by using the Guaranteed Future Insurability (GFI) provision.

Normally, if you want to increase how much you’re covered for, the insurer will treat your request like a new application. It will ask about your current health status, weight, and any recent doctor visits. If you’ve developed a health issue since you first got the policy, it might charge you more or refuse the increase. GFI is a special rule that says: “Because you just had a major life event (like getting married or having a child), we promise to give you more cover without asking any health questions.”

If you get married, have a child, or take on a home loan, contact your insurer as soon as you can as time limits may apply. You may be able to ask to increase your benefit amount using the “GFI” or “Life Events” option.

Do I need life insurance?

It’s a good idea to seek professional financial advice to help you decide if a policy is right for you. Many Australians have life insurance through superannuation, so you may want to work out whether this coverage is sufficient for your needs, and whether your super fund offers it. 

If you’re considering buying a policy, ask yourself: 

• If you passed away, would your family be able to maintain their current standard of living and achieve the future financial goals you had set?
   
• If you were permanently disabled, how would your family pay the bills and support you? If you don’t have a family, who would look after you and would you be able to afford the care?
• How long could you continue to pay your bills if you could not work due to sickness or injury?
   
• If you suffered a significant injury, could you afford home modifications? How would you pay for the cost of any long-term rehabilitation?

Based on your responses, you may find you’ll benefit from having a level of cover in place.

Insider tip: Review your cover as you age

As you get older and more likely to make a claim, premiums can become less affordable. So think ahead about your needs, not just about this year’s increase. Winding back your level of cover can be an alternative to an outright cancellation.

How much life insurance cover do I need?

How much cover you need depends on your personal situation. The Moneysmart life insurance calculator can provide an estimate of how much cover you and your family may require if you were to pass away. However, you may like to seek financial advice from a qualified advisor before making a decision.

Insider tip: Don’t leave yourself under or overinsured

It’s easy to overdo it with life insurance. Paying for a hefty policy when you don’t need that level of cover could just be throwing money away. Work out how much your family would actually need if something happened to you—think mortgage repayments, education costs, and ongoing expenses—then tailor your policy accordingly.

How to choose the right life insurance for you

When looking for the right life insurance policy for you, think about:

• What you want to be covered for. For example, do you need term life insurance, TPD, income protection, trauma insurance, or a combination of the four?
• Are you already covered by your superannuation?
• How large of a benefit amount do you require? Think about you and your family’s financial needs and how much it could cost to keep them comfortable if something happened to you. Remember that the higher the benefit amount, the bigger your premiums will be.
• How much can you afford to spend on premiums? Comparing your life insurance options from our Online Partners using the table above can help you find a policy that’s right for you, while also giving you value for money.
• Are your pre-existing medical conditions covered or excluded?
• Seek professional financial advice.

What are the pros and cons of life insurance?

Pros

• The ability to take out cover that specifically meets your needs and offers a financial safety net for your dependants.
• Gives you peace of mind that your dependants will likely be financially comfortable if you were to pass away.
• Flexible options around the types of cover you can take out, as well as how you pay your premiums.
• Benefits paid out to dependants may be tax-free, depending on the policy and how it was purchased. For example, benefits paid on income protection policies and policies held within super may not be tax free.
• If you have life insurance through your super, you may be able to pay your premiums from your super balance or through concessional contributions rather than your after-tax income.
• Cover will generally continue as long as you pay your premiums. This is different from life insurance provided by super, which may end at age 70, according to Moneysmart.

Cons

• Premiums may be more expensive for a direct or advised policy compared to one held in super. Life insurance premiums in general are also an ongoing cost, which may become more expensive as you age.
• Your pre-existing medical conditions may be excluded from cover or you may not be offered cover at all. You may also have to serve waiting periods before you can make a claim.
• The benefit amount you choose could leave you underinsured, especially if your family’s expenses increase over time.
• The older you get, the harder or more expensive it might become to take out cover.

Looking for cheap life insurance?

If you’re shopping around for cover, you might be tempted to go with a cheap life insurance policy to keep costs down. But it’s important to consider the level of cover you’re getting, as this can affect the overall value. A low-cost policy may offer a smaller payout or exclude certain risks that could be relevant to your health, job, or hobbies.

Your lifestyle, such as whether you smoke, can also affect the premium you pay. It’s worth comparing policies to find one that provides the right level of cover for you and your family while still offering good value for money.

Insider tip: Consider opting-out of the annual Consumer Price Index (CPI) increase.

Most policies automatically increase your ‘sum insured’ every year to keep up with inflation. This sounds helpful, but it also causes your premium to rise significantly over time. As you get older, your debts (like a mortgage) typically decrease, and you may actually need less insurance, not more.

Review your annual renewal notice. If you feel your current level of cover is sufficient to meet your family’s needs, you can decline the CPI increase for that year to keep your costs lower.

Tips to reduce life insurance premiums

• Improve your health and lifestyle. For example, if you decide to quit smoking, your insurer may lower your premiums after 12 months. You’ll need to get a re-assessment though.
• Pay your premium annually rather than monthly, as some providers may offer you a discount.
• Determine what cover you actually need, as you may not require all forms or features of cover (you may want term life insurance but not require TPD or income protection, for instance). You should also consider reviewing your coverage amounts to ensure that you’re not overinsured.
• Check to see if you already receive life insurance through your super and whether it provides you with sufficient coverage.
• If you have multiple insurance policies with the one provider, you may receive a multi-policy discount. That said, it’s important to consider whether you’re getting the value out of having multiple policies with the same provider, rather than policies with separate providers.
• Obtain quotes from a range of different providers to ensure you’re getting an adequate level of cover and good value for your money. You can compare policies from our Online Partners by using the comparison table above.

Insider tip: Request a medical loading review if your lifestyle has changed.

If you were a smoker or had a high BMI when you first applied, the insurer likely added a ‘loading’—an extra percentage on top of the standard premium’s cost. Insurers don’t automatically remove these if you improve your health. You could be paying 50% to 100% more than you need to simply because the insurer is using data from years ago. If you’ve been a non-smoker for at least 12 months or have maintained significant weight loss, ask your insurer for a ‘loading review’. It has the potential to lower your premiums.

How do I make a life insurance claim?

Making a claim on your life insurance policy should be fairly straight forward:

1. Notify your insurer that you want to make a claim via its online portal or by contacting it directly
2. Submit the necessary forms and medical evidence required
3. Your insurer will assess your claim (in cases of term life insurance, it’ll usually have 10 business days once it receives all requested information)
4. If your claim is successful, your insurer will pay out your benefit amount to your chosen beneficiary/beneficiaries

If your claim is rejected you may still have options. If you disagree with your insurer’s assessment, you can usually make a complaint directly to it and request additional information. If you’re still unsatisfied with the outcome, you can make an official complaint to the Australian Financial Complaints Authority (AFCA).

Is life insurance tax deductible?

Only income protection insurance is generally tax deductible. This is as long as you pay your premiums with your after-tax income (not through super). Check with the Australian Taxation Office (ATO) or a qualified tax professional for more information around what you can and can’t claim as a deduction.