Life Insurance Sydney

Understanding Life Insurance in Sydney

Life Insurance is a critical component of financial planning for anyone who has dependents. In Sydney, the concept of life insurance is not different. It offers a financial safety net for your loved ones in the event of your untimely demise or terminal illness. This article will delve into the intricacies of life insurance in Sydney, its different types, and factors that affect the cost of life insurance premiums.

What is Life Insurance?

Life Insurance, colloquially known as Death Cover or Term Life Insurance, provides a lump sum payment to your chosen beneficiaries if you’re no longer around or diagnosed with a terminal illness. This financial support can help your dependents meet the ongoing expenses, repay debts or cover funeral costs, ensuring their financial stability even in your absence.

Different Types of Life Insurance

When you decide to take out life insurance, there are various options to consider that can be tailored to suit your needs. The main types include:

  1. Term Life Insurance: This insurance covers you for a specified number of years, determined at the time of policy purchase.
  2. Funeral Insurance: This insurance provides a payout to assist your loved ones with organising a funeral and settling your affairs once you are gone.
  3. Additional Cover: Life insurance can be customized to include optional extras, such as illness cover, which provides financial support if you suffer from a critical illness like a stroke or heart attack.

How Life Insurance Works

When you take out a life insurance policy, you agree to pay regular premiums in return for a lump-sum payout to your beneficiaries upon your death or terminal illness. This payout can help your loved ones manage financial obligations, including household expenses, mortgage repayments, and educational costs.

Life Insurance through Superannuation

Life insurance can be obtained through a specialist provider or your superannuation fund. Most superannuation funds provide automatic cover when you become a member and meet their eligibility criteria. However, the premiums for life insurance through your super fund are deducted from your super account, reducing your total retirement savings.

Income Protection Insurance

Income protection insurance is another type of cover that you may consider. It offers a monthly payout, usually 85% of your income, if you are unable to work due to illness or accident. It’s vital to note that income protection premiums won’t be tax-deductible if you take it out through your superannuation fund.

Factors Affecting Life Insurance Premiums

The cost of life insurance premiums varies based on several factors, including:

  1. Type of Cover: Comprehensive coverage attracts higher premiums.
  2. Health and Lifestyle: Poor health, smoking, and excessive alcohol consumption can increase the cost of premiums.
  3. Occupation: High-risk jobs may attract higher premiums.
  4. Age: Older individuals are likely to pay more for life insurance.
  5. Policy Features: Additional cover and special conditions can inflate the cost of premiums.
  6. Sum Insured: The higher the payout upon death or terminal illness, the higher the premium.

Things to Consider When Taking Out Life Insurance

Before you buy life insurance, consider the following:

  1. Coverage Needs: Determine your financial obligations and goals to decide your cover level.
  2. Premiums: Ensure you can afford to pay the premiums every month.
  3. Policy Terms: Understand the coverage, exclusions, and limitations of your policy.
  4. Health and Lifestyle: Be prepared to provide information about your medical history and lifestyle.
  5. Beneficiaries: Choose your beneficiaries carefully, ensuring it reflects your current wishes and is consistent with your estate planning goals.

Questions to Ask Your Insurance Provider

Before purchasing a policy, consider asking your provider the following questions:

  1. What type of coverage options are available?
  2. How much coverage can I get for my premium payment?
  3. What is the process for lodging a claim?
  4. Are there any exclusions or limitations in the policy?
  5. Are there any discounts or promotions available for purchasing life insurance?
  6. Are there any associated fees with the policy, such as administration fees or early cancellation fees?

How to Buy Life Insurance

Before purchasing life insurance cover, research your options, and consider your circumstances. A broker can help you find the best coverage from different insurance companies. Alternatively, you can shop around yourself and go directly to a life insurance provider.

Exclusions to Look Out For

Most insurers have general exclusions in place for every type of life insurance cover they offer. These default exclusions form part of their policies regardless of your medical history, financial circumstances, health, and wellbeing. Some common general exclusions include criminal activity, negligent or reckless behaviour, and suicide or self-harm.


Life insurance is a valuable tool for protecting your loved ones’ financial future. Understanding how life insurance works, the types available, and the factors that affect the cost of life insurance premiums can help you make an informed decision when purchasing a policy in Sydney. Remember to carefully read the terms and conditions of your policy, and don’t hesitate to ask your provider any questions you may have.