How Much Does Life Insurance Cost?


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.

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


What factors do insurers consider to calculate the cost?


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:

  • Age – In most cases, monthly premiums are more expensive the older you are at the time of your application. This works on the assumption that you’re more likely to die as you age and get nearer to reaching your life expectancy.
  • Gender – With all other factors equal, men typically pay more than women when it comes to life insurance because women statistically have higher life expectancies than men.
  • Occupation – Your life insurance premiums will likely by more expensive if you work in a high risk profession.
  • Lifestyle – If you participate in activities considered dangerous or high-risk, then your insurance premiums will likely be more expensive to reflect the increased risk of dying.
  • Health Profile – Your current state of health will play a major role in assessing your level of risk. Insurers typically evaluate factors like your body weight, blood pressure, and heart health. They’ll also consider any pre-existing medical conditions that you may have and how severe they are.
  • Family Medical History – Aside from your health, many insurers will also consider your family’s medical history. If your family has a history of serious medical diseases, then this could increase your level of risk and monthly premiums.
  • Smoking Habit – Smokers pay higher premiums than non-smokers, and this is one of the few things that’s consistent with every insurer. Smoking unquestionably increases your risk of dying, and insurers reflect this higher risk in their premiums.
  • Length of Cover – The longer your period of coverage, the more expensive your premiums will likely be.


Is there a difference in cost between Whole Life and Term Life Insurance?


Yes. Whole Life insurance is usually more expensive than Term Life insurance because it provides lifelong coverage and involves a form of investment. Term life insurance, on the other hand, is more limited and applicable only for the duration agreed upon. However it is important to note that in Australia, Whole Life insurance is not available through the major retail insurers/


Will the type of premium plan affect the cost?


Yes, but evaluating the affordability of a premium plan will depend on your financial goals and situation.

There are two main types of premium structures: Stepped Premiums and Level Premiums.

Stepped Premium Plans feature lower premiums in the early phases, and they’re often the cheaper option when signing up. But their premiums increase throughout the life of the policy, and they become more expensive as you get older.

Level Premium Plans feature higher premiums early on, but their premiums stay relatively constant over their lifetime, with only minimal increases to accommodate inflation and other factors. So while they’re more expensive to get initially, they can lead to more savings in the long run.

Given that, you’ll need to evaluate their short-term and long-term consequences to determine which structure is the more affordable choice for you.


How can you make your life insurance more affordable?

The following are some ways that can help lower the cost of your monthly premiums:

  • Maintain a healthy weight - A healthy weight for your age and body type is a sign of good health. A body weight that falls outside of your normal body weight range (for your age and body type) often increases the risk level for many serious chronic diseases like heart disease and diabetes.
  • Maintain good heart health - This includes maintaining normal blood pressure, monitoring your blood cholesterol levels, and staying active.
  • Minimise hazardous activities - The less dangerous hobbies you have, the less risk you’ll pose to insurers and the cheaper your premiums will likely be.
  • Don’t smoke / Quit smoking - Smoking categorically increases your risk of dying, no matter how young or old you are.
  • Get regular physicals - Regular check-ups with your doctor will help prevent diseases or treat them early before they become worse.

Need help estimating how much life insurance will cost you?

If you need help calculating the cost of life insurance, then let our insurance specialists help you. “How much does life insurance cost?” is one of the most common questions we get, and we’ve been helping clients around Australia answer that question for years.

You can use our life insurance calculator to estimate how much cover you need for different plans. If you want more in-depth advice for your case, you can contact our team to find out more. We can also make a life insurance comparison and compare life insurance plans from different providers so that you’ll have the best options for your needs.

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