Best Life Insurance in Australia

Mitch Ramsbotham

Financial Expert Updated on June 20, 2023

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What is the best life insurance in Australia that provides long-term financial security and stability for your family in the event of your passing? 

With the Australian Government suggesting that approximately 78% of Australians perceive life insurance as crucial, have you considered a life insurance policy? Have you taken these necessary measures to guarantee that your dependants receive a lump sum following your death? Do you feel like you don’t need life insurance because you’re fit and healthy?  

This article provides some basic information, useful when deciding which is the best life insurance in Australia for you. We consider what life insurance is, how to select the right coverage, and whether the best and cheapest policies are the right fit for you.

Our financial guide also includes helpful tips for determining the amount of cover you need, whether you should consider switching insurers or changing life insurance policies, and the average time frames insurers work towards when paying out a life insurance claim. 

Jump straight to…

What Is Life Insurance? 

Generally speaking, life insurance is also commonly referred to as:
  • Life cover
  • Term life insurance
  • Death cover 

The primary intention of a life insurance policy is to pay a lump sum to your nominated beneficiaries after you die. 

In the event that you haven’t named a beneficiary to receive the death benefit upon your death, a superannuation funds trustee (or alternatively your estate) will determine how the benefit is distributed.

Life insurance policies may also include terminal illness cover, with insurers paying a lump sum, in circumstances where a doctor diagnoses you with a terminal illness with a limited life expectancy.

Similarly to an income protection insurance policy, it is essential that you read the relevant product disclosure statement (PDS), clauses, and disclaimers before purchasing any life insurance product. The PDS contains information about the life insurance cover that may impact your choices, including the benefits, commissions, key features and fees.

Aside from income protection, there are also several other types of life insurance coverage available on the market.  

Whole life insurance offers a benefit for the insured’s whole lifetime. Meanwhile, a term life insurance policy provides insurance for a specified term. Both insurance options can give financial stability to your family. The right cover for you will depend upon factors such as your life stage and financial needs.

How Much Does Life Insurance Cost?

Cost is often one of the most considered factors for individuals considering life insurance, and there are several factors that can determine the cost of a life insurance policy, including your:
  • Age
  • Sex
  • Smoking status (smoker or non-smoker) 
  • Level of financial coverage required

Typically, males tend to pay higher life insurance premiums than females. For example, a non-smoking female in her 30s would most likely pay a lower premium for a direct life insurance policy than a male smoker of similar age.  

Should you decide to purchase life insurance, it is important to remember that price isn’t everything. 

It is also pertinent to consider the type of life insurance that is best suited to your lifestyle. Additionally, it is also relevant to consider the other benefits of the policy, with some life insurance products bundled together with total and permanent disability (TPD) and trauma insurance.   

TPD insurance covers an injury or illness that renders you permanently incapable of working. Meanwhile, trauma insurance pays a lump sum for injuries or critical illnesses specified in the coverage, and is generally not payable long-term with benefits capped after a specific number of years. 

If you are confused and perhaps feeling overwhelmed by the multitude of different products, insurance types, and terminologies, My Money Sorted’s Finance Experts can help you review salient product features. This includes reviewing the target market determination (TMD), a document that is essential in assisting you to find the best policy based on your individual circumstances.  

Financial advisers can also provide perosnal advice about your life insurance policies.

Exclusions are also another critical factor to consider when choosing a life insurance policy. You may need to shop around if you think: 

  • You’re paying too much for life insurance
  • You’re not getting enough coverage for your premiums
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How to Choose the Right Life Insurance

Choosing the right life insurance policy can certainly be challenging. However, what Australia’s leading life insurance companies have in common is a diverse range of policies and inclusions designed to meet various requirements and offer adequate protection for you and your family.

Life insurance may seem like an attractive option to provide long-term security for your family’s future. These benefits are attractive, but you should still carefully weigh up several factors when buying a life insurance policy. 

Sources of Life Insurance 

Before shopping for life insurance, check if your superannuation fund already has a life insurance component. Most superannuation funds provide default life cover, which can be cheaper than life insurance policies purchased directly from an insurance provider.

Should your superannuation fund already provide life insurance coverage, there is also the option to increase the level of cover if necessary. 

Alternatively, you can also purchase life insurance from non-super fund sources, including: 

  • An insurance company
  • An insurance broker
  • A financial adviser 

Purchasing a life insurance policy can simply mean purchasing a standalone life insurance or bundling a life insurance policy with options, like trauma cover. The advantage of selecting bundled life insurance is that you will likely pay reduced rates for more comprehensive coverage.

Before you buy, renew, or switch insurance providers, check if the policy will cover you for certain types of claims. Things like medical expenses or travel benefits amidst unforeseen events, like the novel coronavirus disease (COVID-19) outbreak, may also impact upon your choice of policy.

Your Requirements

When comparing Australian life insurance companies, it is important to clarify your requirements first. This ensures you can match your needs with a policy’s benefits. One important consideration is to calculate the amount of money your family needs to maintain its current lifestyle. 

Add up any costs you may be required to cover in the future, including average monthly expenses like utility bills and groceries, as well as outstanding debts like a mortgage or credit card balance. 

Life Insurance Premiums 

Life insurance premiums are payable under two methods:
  1. Stepped premiums
  2. Level premiums

Stepped Premiums: These premiums are recalculated at every policy renewal and become more costly yearly, based on the increased risk as you age.  

Before you can purchase a policy under this method, experts in insurance underwriting use a specific methodology to assess the risks of insuring you.   

Level Premiums: Insurers usually charge a higher premium at the beginning of the policy. However, these premiums do not increase with age. 

Choosing either stepped or level premiums significantly impacts your policy’s cost, so you should carefully calculate whether you can afford them and which is best suited to your financial needs 

Built-in Benefits 

Built-in benefits are also important when it comes to choosing the right life insurance policy. Insurers usually offer policies with numerous built-in benefits or “add-ons,” which can include:  
  • Terminal illness benefits
  • Funeral advancement benefits (some may include expenses from facilities and services)
  • Financial advice benefits
  • Premium freeze options (prevents premium from increasing)
  • Interim cover (temporary cover while a claim is processed)

Discounts and Rewards

Who doesn’t love a discount? Despite the serious nature of a life insurance policy, insurers frequently offer discounts to new customers and individuals purchasing multiple policies. As a policyholder, you may also receive a discount for paying your premiums in advance, on an annual basis, as opposed to monthly.


Life insurance may be subject to particular exclusions, including events, conditions, or financial situations the insurer doesn’t cover. It’s recommended to read an insurance company’s PDS carefully, to ensure you meet the eligibility criteria.  

Financial Strength Ratings 

Financial Strength Ratings can help measure the creditworthiness of an insurance company, suggesting how reliably a company can pay insurance claims. Given that a life insurance policy is purchased as a form of security for the future, considering the financial strength of an insurer is vital in terms of future risk management.

Customer Reviews

Reviews provide a snapshot of customer experiences. Customer reviews provide valuable insight into an insurer’s customer service, with real customers providing commentary and feedback related to their experiences. Reading these recommendations and complaints can also provide unspoken details about particular policies, and is a great source of first-hand, real information. 

Life Insurance Comparison

After you determine how much life insurance you need, the next step is to shop around to compare different policies to find one that is best suited to you. During this process, you should consider: 
  • Policy features 
  • Benefits
  • Cost of the premiums 
  • Exclusions
  • Waiting periods or waiting times (time you have to wait before you can claim some or all benefits) 
  • Limits on cover

With a variety of financial products and a large number of life insurance providers in Australia, it pays to know the leading insurance companies in the industry. The most common life insurance providers are:

  • NobleOak
  • TAL
  • Zurich 
  • AIA Australia Limited
  • OnePath 

Again, it is important to remember that cheaper policies may contain more exclusions or become pricier in the future. Hence, it is recommended to compare life insurance quotes before purchasing one.

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What Is the Best Life Insurance Policy?

Is bigger really better when shopping for life insurance? You may also be wondering which Australian life insurance company is the biggest. For the 2021 financial year, TAL reported a 27% market share making it Australia’s largest life insurance provider. 

That said, there is no perfect, one-size-fits-all life insurance policy. The nation’s largest insurer in terms of market share or claims may not offer the features you’re looking for, so it is a great idea to consider other providers.   

The “best” policy that’s ideal for you should be based on a wide range of factors, including your:

  • Needs
  • Budget 
  • Lifestyle 

Before purchasing life insurance, there are some important questions you should ask yourself: 

  • What debts do you have now?
  • How much do you need to pay your mortgage or rent?
  • Do you need to consider living expenses like child care and education?
  • How much will you receive from your superannuation, savings, shares, and existing insurance policies?
  • What kind of support can your family provide? 
  • Do you have any pre-existing medical conditions that may affect insurance claims or your ability to purchase life insurance?
  • Do you have existing life insurance policies through your superannuation fund?

After answering these questions, you should be better prepared to determine how much your family requires to be financially stable should you pass away. 

What Is the Cheapest Life Insurance Policy?

The cheapest monthly premiums for life insurance may not be the most affordable option in the future. With prices always subject to increase, choosing the cheapest policy may end up costing you more in the long-run.

 It is important to consider factors such as budget, needs, level of coverage and customer reviews prior to taking out the cheapest life insurance policy you can find. If the policy doesn’t meet your needs, it will not provide the financial security that you are seeking from such a policy.


Claim your Free Life Insurance Check-Up with our Finance Experts

If something happens to you, consider if your family can cover particular expenses, like mortgage, rent, and car loan payments. A cheaper policy may be more relevant, given you already have a level of support to rely upon. 


Do you have sources of financial support, like investments or a savings account, your family can use?

Savings are great, but can dwindle quickly, so it is important to consider your level of savings and whether your current level of savings is sustainable in the long term. 


Can your superannuation balance or annual leave be paid out to add to your income?


Remember that “health is wealth.” What is your overall health and fitness level? Can your medical history or pre-existing conditions affect your insurance policy? Do you have a family history of medical issues that may also affect you in the future?


How can you best pay your premiums? Stepped premiums can cause life insurance policies to increase yearly as you age. Meanwhile, level premiums are more expensive at the start but only increase based on the weighted average price of consumer goods and services or the consumer price index (CPI).


Do you have children or are you planning to start a family? Can your extended relatives support your family after you’re gone? 

Once you consider all of the above factors, you can determine whether the cheapest life insurance still works or you need a policy with more cover and inclusions. 

5 Tips for Picking a Life Insurance Policy

Now that you are well equipped with relevant information to select the right insurer and level of cover, here are 5 essential tips to help you select the right life cover;

1. Select an ideal cover amount 

Calculate how much money your immediate family members would need to maintain their current lifestyle if you were no longer around. A well considered estimate may help you avoid paying a higher premium than necessary. 

2. Determine the cover benefits you require 

Be particular about what you’re searching for in terms of the benefits you require. Here are some crucial questions to ask yourself so you can identify the coverage you need:
  • Do you need a lump sum payment to ensure that your family is cared for after you die or experience a terminal illness? 
  • Does a joint cover with your partner provide a discount? 
  • Does your policy need a funeral benefit that quickly pays out?

3. Submit an accurate application

Be upfront about pre-existing conditions and other potential issues such as your smoker status. An insurer may invalidate your policy if you fail to submit an accurate application. Insurers can also reject the future claims of your beneficiaries if they find false information has been provided. 

4. Compare several policies 

Online comparison tools are great for analysing and comparing the differences between life insurance products. You can view policies’ key benefits side by side and filter out the features that are not relevant to your needs. You can also see a more in-depth breakdown of each type of cover. 

Consult a life insurance adviser with an Australian Financial Services Licence (AFSL) to help you find the best cover. You should also check if the financial services company has an Australian Business Number (ABN) or an Australian Company Number (ACN) to verify its legitimacy. 

5. Read the insurer’s PDS  

For peace of mind, read the PDS and learn about the details of your life insurance policy, including benefits, exclusions, and restrictions. 

Thoroughly check the documents and review the disclaimers. 

How Much Life Insurance Cover You Need

Online calculators can help estimate the amount of life insurance you need. 

A perfect way to estimate this amount is to calculate manually, using this formula:

(annual salary) x 10 

Another alternative computation method is to use the mnemonic “CIMER,” which requires you to summarise the following items so you can calculate your total cover required: 

  • Clean up: insurance for short-term expenses, such as your funeral fees
  • Income: Lump sum benefit to give your family additional income
  • Mortgage repayment 
  • Education costs (for each child) 
  • Retirement budget for your spouse or lover 

How Long Until an Insurer Pays Life Insurance Claims

After the insured’s death, the nominated beneficiary should contact the insurance company to notify them to begin the claims process. 

Let’s say the policy includes critical or terminal illness cover. The insured can make a claim after a doctor diagnoses the terminal illness and the person has under 12 months to live. 

Insurance companies strive to provide a smooth and stress-free claims process. They often process death cover claims in as little as two weeks!

According to the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA), in 2017, around three-quarters of life insurance claims were processed within eight weeks. 

Filing a Life Insurance Claim

In order to file a life insurance claim, a beneficiary must first notify the insurer that the policy holder has passed away. This can be achieved by simply calling the insurer or by sending an email. 

After contacting the insurer, the beneficiary will be required to provide relevant information, such as the policy number and the nominated person’s identifying features.

The insurer then provides the necessary information once beneficiaries make a claim. The company gives out a claim number and assigns a claims consultant to help expedite the process. 

The insurance provider may also ask you to complete forms related to the nature of the claim and submit other documentation, such as a death certificate. 

In the case of accidental death, more information may be required, such as a coroner’s report.

Can You Switch Life Insurers?

Switching life insurance companies is generally quite an easy process. An increasing number of Australians are changing life insurers to secure better value for money. 

However, you should avoid cancelling your life insurance policy before your new policy begins. This step will help ensure that you are covered before switching to the new insurer. 

Who Regulates Life Insurance Companies?

According to the Life Insurance Act, all life insurance companies must secure a licence from the Australian Prudential Regulation Authority (APRA) to conduct business in Australia.

APRA is the regulator of Australia’s financial services industry, ensuring that regulated institutions, such as insurers, consistently meet their financial obligations under reasonable circumstances. 

Life insurance can help guarantee financial security for your loved ones in the unfortunate event of your passing. 

It is, however, critical that you find the best life insurance policy for your circumstances, considering the amount your beneficiaries need to cover the costs of monthly bills, education, and debts. 

Still not sure where to start, or want help securing the right insurance faster? 

That’s okay!

Many people may be unaware of this…but just like you, 41% of Aussies intend to get financial advice rather than going it alone, according to an Australian Securities and Investments Commission (ASIC) report.

You can reach out to My Money Sorted to guide you for free before you seek professional advice from an insurance expert!

When you book a call with My Money Sorted, you’ll:

✓ get a better understanding of your money matters

✓ have an idea of your money goals

✓ be matched with the right insurance expert who can help simplify your search for an insurance policy that fits your needs

My Money Sorted is your stress-free pathway to getting ahead with your money. Here’s what your journey will look like:

Step 1: Start off with a quick money matters session with My Money Sorted

Step 2: Get matched with a Insurance Expert that’s right for your money situation

Step 3: Take the first step towards getting the protection you need with a clear and sound roadmap prepared by an Insurance Expert

It’s that easy!


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1. How life insurance works 


2. Life cover


3. Exclusion 

4. REP 498 Life insurance claims: An industry review


5. Underwriting 


6. Whole life insurance


7. Term-life insurance


8. Super


9. Disclosure 


10. Total and permanent disability insurance


11. Trauma insurance 


12. Consumer price index

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