• In Australia life insurance is also known as:

• life cover;
• term insurance; or
• death cover.

It is usually used as an umbrella term that includes a range of policies you may take out to protect your family if you die or suffer a serious illness or disability. For example:

• accidental death insurance;
• serious illness or trauma insurance;
• total and permanent disability insurance; and
• funeral insurance.

• Depending on the terms of the policy life insurance helps by covering you and your family financially in case of an insured event such as death or terminal illness.
• The insurance company provides a lump sum payment on the death or on diagnosis of a terminal illness of the person whose life is insured. The funds from the insurance payout may be useful to pay:
  • any debts you have such as mortgages and credit card debts;
  • your children’s future educational costs;
  • rent;
  • future household costs; and
  • income to maintain your current lifestyle.
• Most policies state that to apply for life insurance you must be:
  • 18-64 years of age; and
  • an Australian resident.
• Some policies allow persons aged between 2-17 years to also apply for life insurance called ‘children’s life insurance.’ The Product Disclosure Statement should be checked to see whether the insurance policy includes minors and under what conditions.
• Some insurance policies offer limited suicide cover.
  • Some disclose a 13 months exclusion period for paying benefits if the death is a result of the insured person’s intentional act or omission. This means that the insurance company will not pay any benefits if for example the life insured commits suicide in the first 13 months of the insurance policy.
  • Some polices have longer exclusion periods that may be up to five years from the date the cover commences.
  • There are some policies that list suicide as an exclusion if the life insured has a history of mental illness or past suicide attempts.

• The amount of life insurance a person may take out depends on their current age.
  • The younger a person is the higher their benefit amount. For example some insurance policies offer a person:
    • aged between 18-44 a maximum benefit amount of $1,000,000; and
    • aged between 60-64 a maximum benefit amount of $300,000.
• Before your life insurance can begin an insurer must accept your application for life insurance.
  • Some insurers require medical and other health tests before approving an application for life insurance.
  • Usually the acceptance date is the commencement date and it is set out in the Policy Schedule.
  • Your life insurance ends on:
    • the date the company pays the insured amount following the death of the life insured;
    • a diagnosis of terminal illness of the life insured;
    • the date you cancel the policy; or
    • the date the insurance company cancels the policy.
• A premium is an amount of money you must pay to keep the policy.
  • For life insurance policies premiums are calculated annually and are based on the life insured’s age at the time of application. Premiums may be paid either monthly or annually.
  • The following factors are considered when determining the premium:
    • age;
    • smoking status;
    • gender;
    • health including personal and family history of medical conditions; and
    • the level of cover.