Live, laugh, life insurance

As a general guide, life insurance should cover at least the total of your home mortgage and, if you have children, 5–10 times your salary.

Brenton Tong
Financial planner

People tend to underestimate the importance of life cover. With the right policy in place, your family's finances and wellbeing can be protected for decades. One feature I always tell people not to overlook is TPD cover. It isn't automatically included in a policy.

James Martin
Finder's life insurance editor

No one is ever really prepared for life's harsh surprises, but insurance can help soften the blow... Life insurance is about protecting what matters most. That's the people around you, rather than just material possessions like cars or boats.

Phil Thompson
Financial adviser at Skye Wealth

When I moved to Australia, I cancelled the life insurance in my super. For me, the payout wasn't big enough. A standalone life insurance policy, outside of super, typically pays out much more and won't eat into your retirement savings.

Gary Ross Hunter
Finder's insurance and innovations editor

If (like me) you don't don't have children or anyone who would be left in the lurch financially if you died, you might not need death cover. I have TPD and income protection instead. If I ever need to claim, that money could help with the cost of ongoing medical expenses, fitting my home with any necessary disability equipment and just the general cost of living.

Nicola Middlemiss
Insurance specialist

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Frequently asked questions

• Which insurance company is best for life insurance?

  The best policy for you will depend on the insurance type that meets your specific needs and life circumstances. To help you out, we've identified some of the highest-scoring life insurance brands based on our Finder Awards data.

• Is it worth getting life insurance in Australia?

  Life insurance is often worth getting if you have a partner or people who depend on you financially. Many Australians automatically have life insurance included in their super. However, it's often not enough to cover all of your debts. A standalone life insurance policy can cover you for more.

• Who gets a life insurance payout?

  A life insurance payout goes to the beneficiary, which is the person or people you choose to receive the financial benefit of your life cover policy after you die. A beneficiary can be a family member, a friend, a trust or an organisation.

• Is it better to get a life insurance policy inside or outside of super?

  It's an individual assessment depending on your cashflow, retirement funding and tax situation. While it's often cheaper and easier to hold life insurance within super, it reduces the amount in your retirement fund. Additionally, the payout is usually small and the policies typically expire when you turn 65. With a traditional life insurance policy, the expiry age is usually around 99 or there is no expiry age at all, as long as you keep paying your premiums.

• What does life insurance cover?

  In addition to paying out if you die, many life insurance policies can cover:

  • Terminal illness cover. This pays a lump sum if you are diagnosed with an illness which cannot be cured, such as advanced cancer. The amount paid is the same as the policy's maximum cover. After a terminal illness benefit is paid, the policy expires.
  • Counselling sessions. This helps with the cost of grief counselling sessions, up to a set limit, such as $1,000.
  • Children's life cover. This option lets you add your children to your policy. If they become terminally ill or die, it can pay you a lump sum.
  • Financial advice benefit. You, or your family, can utilise the help of a qualified financial adviser to help with the management of your estate. The benefit pays up to a limit. For example, $2,000.
  • Funeral benefit. This pays out a portion of your lump sum in advance so your family can pay for your funeral, as the full payout typically takes between 2 and 4 weeks). The payout tends to range from $10,000 to $25,000. Funeral cover is also available as a standalone policy.
  • Interim accidental cover. You can be insured against accidents while your life insurance application is being processed. Usually, for up to 90 days.

• Who is the biggest life insurer in Australia?

  TAL Life Limited is the largest life insurance company in Australia. It accounts for 33% of the market. AIA Australia Limited is the second largest fund (18.3%), followed by Zurich Australia Limited (13.8%).

• What isn't covered by life insurance?

  Claims for certain high-risk activities or illegal ones such as drug use won't be covered by life insurance. You also can't make a claim linked to a pre-existing condition that you failed to disclose during your application.

  To learn about more common policy exclusions that apply to life insurance, read the "general exclusions" section of a policy's PDS. A quick way to do this on your laptop or computer is to search "control + F" or "command + F" and look for "exclusions".

• Does life insurance cover COVID-19?

  Yes. Currently, life insurance providers don't specify COVID-19 exclusions on individual policies. However, you should check if the policy will cover you for claims associated with COVID-19 before you buy, renew or switch insurance.

• I have a pre-existing condition. Can I still get life insurance?

  Yes, it is possible. If you have a pre-existing medical condition, there are insurers who will still cover you. But they might ask you to pay slightly higher premiums or exclude that condition from your cover. It's really important to disclose any condition you have when you apply for life insurance. Not doing so could void your cover.

• What is child life insurance?

  Child life insurance is a feature you can add to your life insurance policy for an added fee. It will pay out a financial benefit if your child dies or suffers a serious medical condition.

• What happens if I cancel my life insurance?

  Life insurance can be cancelled at any time. Keep in mind if you cancel your insurance and decide to take it out later, you'll likely have a higher premium. That's because insurers will see you as a higher risk due to your age or any further medical conditions you may have had.