Frequently Asked Questions

This is a common question to ask. The answer, however, isn’t always so simple.

The world of life insurance can be complex to navigate, which is why we’ve taken this opportunity to break it down for you so you’re well equipped to make an informed decision about whether life insurance is right for you.

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It depends on several factors. There’s no fixed cost of life insurance for everyone, and the amount often differs from person to person. That’s because insurers consider a variety of factors when calculating the cost of your life insurance plan.

No matter the cost, one thing is clear: the real cost of life insurance is often not as expensive as you think.

Insurers price the cost of your policy based on your assessed risk of dying at the time of your application and throughout the duration of the policy. To determine this, they consider the following factors:

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Stepped premiums are a premium structure where your premiums change throughout the life of your policy. Every time your policy is renewed, your premiums are recalculated to reflect factors such as your age and health. Because older people are more likely to make a claim or face medical issues as they age, your premiums tend to become more expensive as you get older in this structure. So while stepped premiums often start off much cheaper than level premiums, they are likely to get more expensive over time.

Level premiums, meanwhile, feature premiums that remain relatively constant throughout the policy duration. The rate of your premium is calculated and based on your age, health, and circumstances at the time of your application. This rate then stays relatively constant throughout the life of your policy, with adjustments only made when the insurer changes their rates or when the level of insurance changes. Level premiums are typically more expensive at the beginning than stepped premiums, but they often result in larger savings over the life of your policy.

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There are usually two types of exclusions in life insurance: general exclusions and specific exclusions. If you compare life insurance from different providers, you’ll find that each will have their own guidelines and definitions for these exclusions.

Despite their differences, however, you’ll find the following to be common life insurance exclusions applied today.

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The medical examination process is a lot simpler and straight forward than many people realise. There are many different types of medical exams that insurance companies might request; they can vary from something as simple as a 10 minute check by a nurse to a full examination by a doctor.

You might also be required to complete a physical test to cover basic medical information such as:

• Weight
• Height
• Pulse
• Blood Pressure
• Blood & urine specimens

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No, generally life insurance is not tax deductable, however the answer to this question isn’t as simple as that. Life insurance, effectively, can be tax deductible in that it can be funded by your super. As you may be eligible to make concessional contributions over and above your superannuation guarantee, you might be able to structure your life insurance such that it is tax deductible. Read more

In life insurance, risk refers to the likelihood of something harmful happening to you.

 

Before providing your proposed coverage, insurers will conduct a risk assessment of your case and evaluate your level of risk. Insurers will then use this level of risk to determine your insurance policy and its corresponding premiums.

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Mortgage protection insurance is a form of life insurance that will assist with your outstanding mortgage (or part of it) if you die or become unable to make mortgage repayments because of a disability, an illness, or job loss.

It typically runs for the duration of your mortgage and ensures that your mortgage repayments will be paid for if something happens to you. This form of insurance is designed to prevent the bank from losing money on their loan if something happens to you.

Compared to most other types of life insurance, however, mortgage protection insurance is often more expensive. It’s also usually offered only by banks and mortgage brokers because of its specialised nature.

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The point of trauma insurance is to ensure you are financially secure while battling with a traumatic health condition. Because of this, the lump sum paid out to you can go towards a number of areas such as:

• Medical or treatment costs that aren’t covered by your health insurance policy 
• Rehabilitation and therapy costs 
• Mortgage and debt repayments 
• Transport cost 
• Home modifications 
• Living expenses and household costs

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Although trauma insurance covers a variety of serious injuries and illnesses, there are exceptions to what it can cover, including self-harm or suicide, some pre-existing medical conditions, and undisclosed medical conditions.

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Total and Permanent Disability (TPD) insurance provides protection if you were to become completely disabled due to sickness or injury and that injury meant you were unable to work. The benefit is paid in a lump sum to the policyholder and their family. Read more

Each insurer will have their own policies and restrictions, so it’s best that you compare life insurance plans from different providers. Some common exclusions include:

• Suicide or self-harm
• Certain pre-existing medical conditions
• Special occupational risks
• Any injury or disability not considered 'permanent'

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TPD Insurance is a type of life insurance that provides a lump sum benefit payment if you experience ‘total and permanent disability’. The operative words here are ‘total and permanent disability’, which insurers will have varying definitions of. Despite the differences in how insurers define this term, they do agree on one thing: the inability to return to work or maintain a normal, daily lifestyle. Bearing this in mind, TPD insurance can cover a variety of conditions that could leave you disabled to the point of permanent unemployment or the inability to live life normally like a healthy individual. Some of the conditions often covered by TPD insurance include:

• Hearing loss
• Speech impediment
• Blindness
• Loss of limb function
• Mental health disorders

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Income protection insurance supplements your income when you’re unable to work due to sickness or injury. The cover can provide up to 75% of your gross wagwes over a specified time period. Depending on the policy you choose, income protection insurance can cover you for either not being able to perform your normal occupation or not being able to perform any occupation. Read more

Most income protection policies will cover you until you turn 60, 65, or 70 years old, depending on your insurer and their guidelines.

With most policies, you’ll also be covered by income protection insurance until one of the following happens:

 

• You cancel your policy
• You’re unable to pay your premiums
• You retire
• You pass away

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The answers to these questions are different for each person, but the right level of income protection is that amount that should allow you to:

• Maintain your desired standard of living
• Meet regular payments - rent, mortgage, credit cards, etc.
• Pay for living expenses - groceries, utilities, clothing
• Pay for education - tuition, school supplies for children (if any)
• Pay for treatment of your sickness or injury
• Other expenses or financial obligations you may have

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Although income protection insurance covers a variety of injuries and illnesses that prevent you from working, it doesn’t cover everything. The success of making a claim for an injury or illness depends on the circumstances of the incident and the policies of your insurance provider. Because each insurer will have their own definitions and guidelines, it’s always best to compare life insurance plans from different providers to find the right plan for you. Despite the differences in policies among insurers, you’ll often find the following to be among the most common exclusions for income protection: Read more

Redundancy insurance is a form of insurance that provides financial benefits if you unexpectedly lose your job because of redundancy or retrenchment. This form of insurance is designed to help you cope financially while you look for a new full-time job. Because of its specialised nature, redundancy insurance is also less common than other types of life insurance. Not every insurer will offer this insurance, and it is generally not a feature of retail income protection policies. Read more

Yes, unlike most websites, we not only do premium and product comparisons. We have highly qualified advisers and our principals are two of the most experienced and highly regarded advisers in Australia. The amount and type of cover should not be selected at random. This is a very important decision and we strongly suggest that you talk to one of our advisers. There is no charge for this service. To contact an adviser, click here.

We use all the major insurance companies in Australia but recommend that you choose one of our Platinum Partners. For more information about them and why we recommend you use them, click here.

We do not charge fees. We get paid a commission by the insurance companies. For more information, please refer to our Financial Services Guide.

No, you can cancel your policy at any time with no penalty and no further obligation on your part.

Generally yes, but you should call us or check your policy as occasionally there may be exclusions to this.

No, not unless you stop paying premiums or in some cases where they discover that you have failed to disclose a material fact at the time of application.

Not necessarily. This depends on your age and the level of cover that you have chosen. If you are healthy, you are very often able to buy large amounts of cover with no medical examination. For more information contact one of our advisers by clicking here.

Contact us. At Cover Australia, we pride ourselves on offering an ongoing service of the highest order. We will handle your claim from beginning to end to ensure that you receive all the benefits you are entitled to in the most efficient manner and with the least amount of stress on you.

Most insurance companies offer the ability to pay monthly, quarterly, half yearly or annually and by credit card or direct debit from a bank account. Some companies also offer the ability to pay by BPay but that is generally not for monthly premiums. It should be noted that annual premiums are lower than monthly premiums and the saving is normally about 8%.

Yes, there can be significant tax implications and we suggest that you read the Product Disclosure Statement or better still, click here to contact one of our qualified advisers.