• The payout you family will receive is called the “Cover amount”. The higher the cover amount, the higher the cost of the life insurance policy.
• The payout does not vary – what you sign up to on day one is what your family receives if you or your partner die.
• The payout is paid on death (or upon diagnosis of a terminal illness).
• Once you know what cover you need (i.e. $500,000 or $1 million), the cheaper the annual fee for the policy is likely to be the most suited policy for you and your family.

​

1.  All of your unpaid debts – i.e. credit card, mortgage, personal loans and car finance etc. This includes any loans from family members as well.  
2. Immediate expenses your dependants would need to pay, such as their living costs for several weeks – estimate $5,000 per dependant to be on the safe side.    
3. $10,000 for funeral costs (although most policies include funeral expenses in addition to the cover amount. 
4. Future spending you have planned, such as university costs for your children. 

​

You can do either. In most cases, it’s almost always cheaper than two single policies, and easier and quicker to set up than two single policies. If you split from your partner, your insurance premium can be re-assessed on an individual basis.
​

​Life insurance premiums increase with the likelihood of your death. A 30-year-old office worker will have a cheaper premium than a 90-year-old mountain climber. Specific factors include:

• Age – generally, the younger you are, the cheaper the policy
• Health – likewise with age, the healthier you are, the cheaper your premium will be, and insurers encourage a healthy lifestyle with discounts if you meet their criteria.
• Risky occupation – if you have a higher risk job (construction, mining etc), your premiums will be higher.
• Smoker – smokers pay a lot more for life insurance, as they tend to die earlier

​

​The cost of life insurance rises as you age above 35 years of age, and if you have had a health issue, your policy price will be affected. If you’ve had a health scare and failed to disclose that, there will be consequences later on as insurers are quick to refuse to pay based on “non-disclosure”.

​Remember, a change in health means a change in premium, whereas non-disclosure means a policy will be invalid if claimed on. 

​Firstly, not smoking is going to save you thousands on life insurance. If you have just quit, you may also be covered – some policies require you to be smoke-free for at least 12 months, so it’s worth checking. Again, it’s all about disclosure. If you lie and continue to smoke, your policy could be invalid if you die.
​
Secondly, many insurers encourage and reward you with cheaper premiums if you maintain a "healthy lifestyle". This includes regular exercise (30 minutes a day), 5 servings of fruit and vegetables per day and low consumption of alcohol. While your policy won’t be invalidated if you sit on the sofa rather than walking the dog, the policy will be cheaper if you can make an effort. 

If you already have a life insurance policy, the best buy guide (below) may help you save what you pay each year if you decide to change policies.

If a new quote for the same amount of cover shows a cheaper price, all other things being the same, it's best to switch. Remember, buy the new cover and then, once it’s valid, cancel your existing policy. Never go ”between policies”, i.e. cancel one while you shop around for another, as your beneficiaries won’t receive any payout should you die in that time.

​We recommend you take your time in deciding, making sure the cover lines up with what your previous cover offered. Remember full disclosure is needed about any health issues, so don’t try to save money by avoiding your obligation to declare recent problems. ​
​

• Family Protection Insurance is a specialist insurance policy that provides a monthly payment to your family for a fixed number of years after you die. You pick the amount, and following death or diagnosis of terminal illness, your family gets the amount tax-free every month.
• Family Protection Insurance suits young families who will need money as the children grow up, receiving a monthly lump sum rather than a once-only payout.
• Family Protection Insurance can work out cheaper than life insurance, but it depends on how much you insure for and your age.
• Insurers suggest that Family Protection Insurance “compliments” life insurance, providing regular income while life insurance is used to clear debts. We disagree – one or the other will most often be sufficient for looking after your family in the long term if you insure for the right amount.

​
​To give the best comparison, we’ve taken three examples:

• Using life insurance, the cheapest premium we found was $883.79 per year.
• Using Family Protection Insurance, $5,000 per month (totalling $500,000 after 10 years) the cheapest premium we found was $829.32, 6% cheaper than the life insurance quote.

Looking at our examples, Family Protection Insurance is cheaper in all three scenarios. But every family situation is different and this may not always be the case. 
​

When a parent dies, there needs to be enough money to cover a mortgage and ongoing expenses. Insuring for 10 times the salary of the highest earner allows an excellent cushion to keep the family in good financial health even if the surviving parent stays at home to look after the children. Just insuring to pay a mortgage doesn’t help with any other family expenses, causing great stress in the long term.

We recommend getting it as soon as someone relies on your income, such as a partner and/or child. It’s not a comfortable feeling to insure your life, but the benefits are tremendous to your family should the unthinkable happen. If you are young, life insurance will cost less as younger people are (on the whole) healthier than older people, who pay substantially more as the risk they will die is higher. Please see our table below which illustrates this point.

​25 years old: $475.40
35 years old: $377.22
45 years old: $705.40
55 years old: $1,999.40

It depends. We see many problems with critical illness cover. Firstly, it only covers specific illnesses, so while "cancer" is covered, melanoma, prostate and skin cancer probably are not. And "stokes" have their own exclusions. We're not big fans of critical illness insurance. If you think you should get it for a specific reason, we suggest speaking to an insurance broker to ensure you make the best decision. 
​