Life Insurance Explained
How does life insurance work in Australia?
Understanding the way that life insurance - also known as term life insurance, or life cover -works in Australia is an important thing to know. For example, it can help you work out what kind of cover is right for you and your family.
PYour life insurance benefit is paid out as a lump sum amount to your loved ones in case of your death or terminal illness. The benefit can be used to pay household expenses, help repay money owed such as a mortgage, or be put towards funeral expenses. Simply, your family can remain financially taken care of, even if you are no longer around.
Your life insurance policy can be adjusted to suit your circumstances as you travel through life. For example, if you go through a major life change like having children or you take out a mortgage on a home, you may wish to increase your cover. AAMI Comprehensive Life Cover expires on the policy anniversary following the life insured’s 99th birthday.
How much does life insurance cost?
Life insurance policies offer two different types of premiums:
Stepped Premiums – these increase year-on-year throughout the life of your term policy, in line with your age.
Level Premiums – these are calculated based upon the age you were when you first took out your policy – meaning that level premiums won’t increase each year just because you are getting older. However, level premiums can still increase for other reasons, including for example, if your yearly benefit amount goes up due to indexation, or if we increase our premium rates.
Premiums on your life insurance policy are typically calculated at the moment you apply, and life insurance premiums tend to be higher the older you are. Your age when you purchase your cover may influence whether you prefer to select stepped or level premiums.
Calculate your estimated life insurance coverage using the Life Insurance Calculator.
Top things to consider when taking out life insurance
When taking out life insurance, there are several important factors to consider, including:
- Your Coverage Needs: determine how much coverage you need based on your financial obligations and goals. Consider things like your outstanding debts, living expenses, and future plans.
- Premiums: consider how much you can afford to pay in premiums each month. Keep in mind that the cost of premiums can vary depending on the policy type, coverage amount, and your age and health.
- Policy Terms: read the policy terms carefully to understand the coverage, exclusions, and limitations. Make sure you understand the details of the policy before you to take out the policy.
- Health and Lifestyle: your health and lifestyle can impact the cost of premiums and the availability of coverage. Be prepared to provide information about your medical history, current health status, lifestyle and any risky activities you participate in.
- Beneficiary Designations: choose your beneficiaries carefully. Make sure the beneficiary designation reflects your current wishes and is consistent with your estate planning goals.
Questions to ask your Life Insurance provider when taking out a policy
What type of coverage options are available, and which is best suited for my needs?
This question helps you understand the different types of life insurance policies offered by the insurer and the benefits and limitations of each type of coverage.
How much coverage can I get for my premium payment?
Understand the amount of coverage you can get for the premium you are willing to pay. This will give you an idea of how much protection you can afford for your family.
What is the process for lodging a claim?
It is crucial to have a clear understanding of this procedure to ensure a smooth and stress-free experience for you or your beneficiaries in the event a claim is necessary.
Are there any exclusions or limitations in the policy?
This question helps you understand the conditions under which a claim will not be paid by the insurer. It is important to know the exclusions so you can make an informed decision about your coverage.
Are there any discounts or promotions available for purchasing life insurance?
Inquire about any discounts or promotions available to you, so you can maximize your savings and get the most coverage for your premium payment.
Are there any fees associated with the policy, such as administration fees or early cancellation fees?
Make sure to understand the full cost of the policy, so you can make a smart decision about your coverage and avoid any extra hidden costs.
How to buy life insurance
Before purchasing life insurance cover, it’s important to research your options and consider your own circumstances. The best policy is the one that is going to suit you and your family, and that will give you peace of mind as you live your life.
AAMI Life Insurance products, other than in some circumstances the Redundancy Benefit, is provided by TAL Life Limited ABN 70 050 109 450 AFSL 237848 (TAL Life) which is part of the TAL Dai-ichi Life Australia Pty Limited ABN 97 150 070 483 group of companies (TAL). TAL is not part of the Suncorp Group. TAL uses the AAMI brand under licence from the Suncorp Group. Any advice on this page in connection with the Life products is general in nature and is provided by Platform Ventures Pty Ltd ABN 35 626 745 177 AFS Representative Number 001266101 (PV). PV is part of the Suncorp Group and an authorised representative of TAL Direct Pty Limited ABN 39 084 666 017 AFSL 243260 (TAL Direct). General advice does not take into account your individual needs, objectives or financial situation. Before you decide to buy or to continue to hold a Life Products you must read the relevant Product Disclosure Statement. The Target Market Determination (TMD) for the product is available on our website.