What is life insurance?

Life can be mysterious, but life insurance doesn’t need to be.

Life insurance, income protection, and funeral insurance are often grouped together under the umbrella of life insurance products, but they all differ and provide coverage for a range of different scenarios.

In a nutshell, life insurance cover can help provide financial security for yourself, your partner and your family if something were to happen to you. The funds could be used to keep the household running, cover bills, and help mortgage or rent payments stay on track.

What are the different types of life insurance covers?

Different life insurance covers are designed to help protect you from different circumstances. Some of the covers available include:

  • Life cover provides a lump sum payment if you pass away, or if you’re diagnosed with a terminal illness. The amount of cover you can choose depends on your age, income and your eligibility at time of application.   
  • Total and permanent disability (TPD) provides a lump sum payment if you have an accident or specific medical condition that means you’re permanently unable to work. It’s sometimes called permanently unable to work cover.
  • Trauma/critical illness cover provides a lump sum payment if you suffer a specified condition like cancer (excludes early stage cancers), a stroke, or a severe heart attack.

It’s important to remember that different types of insurances may have specific terms, conditions, exclusions and waiting periods. So, make sure you read the Product Disclosure Statements (PDS) carefully to help you decide which product is right for you.

I have a partner and a family; should I consider life insurance?

If you have people who depend on you, chances are you’ll want the peace of mind that comes with knowing they’re financially protected if something happens to you. Putting a plan in place which might include life insurance cover, can help support your family and help cover the costs of school fees, mortgage payments, or other major living expenses.

I’m single; should I consider life insurance?

If you’re single, you can still protect the life you’ve built. If you pass away it could assist your family or beneficiary. It may even help with living and medical expenses if you’re diagnosed with a terminal illness (and your life expectancy is 12 months or less).

When should I think about getting life insurance cover?

While it’s never too early to plan for protecting your future, some of life’s major events can be a trigger to considering cover, such as:

  • Getting a promotion — as you earn more your financial commitments can grow, so it may become more important to have a safety net in place.
  • Settling down with a partner — a big life event such as marriage or a serious relationship can prompt you to consider, how your loved ones will be taken care of if the worst happened and you were to pass away.,
  • Buying a home — it’s one of the biggest financial commitments you’ll ever make. If you were injured or passed away, insurance could help you or your loved ones continue to cover the cost of the mortgage.
  • Starting a family — as your family gets bigger, your financial circumstances can change too. Getting the right insurance coverage and setting up beneficiaries can help protect your family financially if something happens to you.

Are there any tax benefits to having life insurance cover?

Life insurance cover premiums are generally not tax deductible. However, your individual situation may differ, and you should seek qualified professional advice in relation to your particular circumstances.*

How do life insurance cover premiums work?

In Australia, you can choose to pay for life insurance with either stepped premiums or level premiums. Stepped premiums typically increase each year, based on your age and increased likelihood of claiming as you get older. Level premiums typically increase each year based on indexation rather than your age. You may be charged a higher premium at the start of your policy but the premium increase each year is generally less than stepped premiums, as the increase is not based on your age. Your choice of stepped or level premiums will affect how much your premiums cost now and in the future. If you’re not sure which type of premium is right for you, you can speak to a financial advisor or other qualified professional.

How does life insurance cover through my super fund work?

In Australia, most superannuation funds will automatically provide you with a default level of life cover, depending on your age.  Consider any insurance cover you may have and whether it is enough for your individual circumstances. .

Income protection and TPD cover are sometimes included in super fund policies. Every situation is different, and you’ll need to consider whether the level of cover available is right for you.

How much life insurance cover might I need?

That depends, as everyone’s circumstances are different. However, you may want to consider the following factors:

  • how much you pay each month for rent or your mortgage
  • if you have any debts
  • if you have any dependents
  • how much you spend per month on living expenses (like groceries and bills)

As a starting point, our life insurance calculator can help you to work out how much life insurance you might need. If you’re not sure, speak to a financial advisor or other qualified professional.

What’s the difference between Medibank Life Insurance and Starter Life Insurance?

Our standard Medibank Life Insurance product can provide you with a benefit amount up to $2.5 million depending on your age and income, and has additional optional covers available such as trauma and TPD/permanently unable to work cover, so you can tailor it to your needs. . You can get an indicative quote online, and then complete your application process, including detailed health and lifestyle questions, over the phone. 

Medibank Starter Life Insurance is just that: it’s our starter life insurance product for Australian residents aged 18–45 who may be looking for an amount of cover between $50,000 and $250,000. It can be purchased online in just 10 minutes by answering a few health questions.

Both products include access to the 24/7 Medibank Nurse phone service^ from the day you join, meaning you can chat to experienced and qualified nurses over the phone to discuss any health questions or concerns, and get advice on what to do next.

Here’s a snapshot of both products, side by side:

 Medibank Starter Life InsuranceMedibank Life Insurance
What’s the maximum benefit amount?$250,000~$2.5 million~
Can I add additional, optional covers?NoYes
Will I have access to 24/7 Medibank Nurse?YesYes

~ Depending on your age and income.

You should consider the Product Disclosure Statements for both Medibank Starter Life Insurance and our standard Medibank Life Insurance products and if you’re not sure which one is right for you, you can speak to a financial advisor or other qualified professional.

How do I take out life insurance cover?

Our standard Medibank Life Insurance product needs to be applied for over the phone and includes detailed health and lifestyle questions.

Typically, the kinds of questions that you could be asked when applying for cover are about your:

  • age
  • income
  • job
  • medical history
  • family history
  • lifestyle (for example, if you're a smoker)
  • participation in any high-risk sports or hobbies (like bungee jumping).

You’ll need to provide this information when you apply or increase your level of life insurance.

Medibank Starter Life Insurance can be applied for online in 10 minutes, without lots of health questions.

What’s the Life Insurance Code of Practice?

The Life Insurance Code of Practice (the Code) is the life insurance industry’s commitment to customer service standards. It’s designed to protect you, the customer, and helps lift industry standards in order to deliver better customer outcomes.

Read more about the Life Insurance Code of Practice

Still have questions?

Get in touch. Whether you want to look after your family, or cover yourself for what may come your way, our consultants are available to answer your questions about Medibank Life Insurance, to help you get a quote or take out a policy. Call us on 1300 766 085 between 8:00 am and 8:00 pm (AEST) Monday to Friday.

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Things you should know

* This information is based on current tax laws. This article is an opinion only, provided for general information purposes and shouldn’t be considered or relied upon as professional or personal advice. If you have legal, tax, or financial questions, you should contact an appropriate professional.

^ 24/7 Medibank Nurse Phone Service is offered by Medibank Health Solutions Pty Ltd who reserve the right to withdraw or change the service at its sole discretion.

Any advice provided is general only and doesn’t consider your objectives, financial situation or needs. You should carefully read the relevant Product Disclosure Statement (which sets out the product terms, conditions and exclusions), Target Market Determination and Financial Services Guide available here to ensure the product is right for you. Medibank life insurance products are issued by the insurer, Swiss Re Life & Health Australia Limited ABN 74 000 218 306, AFSL 324908 (Swiss Re). Medibank life insurance products are distributed by Greenstone Financial Services Pty Ltd ABN 53 128 692 884, AFSL 343079 (GFS), and promoted by Medibank Private Limited ABN 47 080 890 259, AR 286089 (Medibank Private). Medibank Private is an authorised representative of GFS.

For more information about how Medibank handles your personal information see our Privacy Policy. The Privacy Collection Notice provides more information about our partner’s privacy practices and policy.

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