Rising costs may make paying for life insurance seem expensive. But instead of cancelling your cover and losing all that protection, try looking for ways you can reduce your premium costs. That may include changing the amount you’re covered for, dropping some of your options, or adjusting waiting or benefit periods.

Why do life insurance premiums increase?

Insurance companies have to charge enough in premiums to cover the costs of paying out benefits. The higher the risk of you making a claim, the more an insurer will charge to cover you.

Risk is calculated using current statistics from the general population. Because older people are statistically more likely to make a claim on life insurance, insurers usually charge a higher premium as you age.

You’ll more likely notice the difference if your policy has variable age-stepped premiums (also known as stepped premiums), which are calculated each year based on your age at your review date.

How your premium is calculated

In general, insurers look at risk factors within your lifestyle when calculating your premium, such as your age, medical background, and occupation.

Other things that affect the cost of your premium are:

• inflation proofing (an annual increase to your sum insured)
• if your policy has variable age-stepped premiums or level premiums (only applicable to policies which commenced prior to 3 February 2024)
• waiting periods and benefit periods
• optional benefits or features
• if you pay yearly, half-yearly or monthly.

You can read more about how we calculate your premium here.

How you can manage premium costs

The key to managing your premium costs is regularly reviewing and adjusting your cover, so premiums don’t get away from you.

1. Work out how much cover you need.

Calculate how much you’d need to pay off debts and provide for your family if you could no longer work or died due to an accident or illness. If you have less expenses than you did when you purchased your policy, you may be able to reduce your cover amount without any worries.

2. Pause automatic inflation proofing.

If your policy has an inflation proofing feature, the amount you're insured for increases annually in line with the rising cost of living. If you discover that you don’t need Inflation Proofing on your policy for the upcoming year, you can opt out for 12 months in the Customer Portal 60 days after your policy’s anniversary or by calling us on 13 65 25.

3. Review the options, benefits and loadings on your policy.

Make sure your insurance cover is not over-catering for extras you no longer need. There may also be loadings that are no longer relevant because, for example, you have stopped smoking or a pre-existing health condition has improved.

4. Look at your waiting period and benefit period.

You can change the waiting period and/or benefit period on income protection cover to reduce the premiums you pay. If you’re willing to wait longer for your first payment or reduce your benefit period (the time you’re eligible to receive income protection payments), you may pay less.

5. Change your payment frequency.

If it’s realistic, you could look at paying your premiums upfront or half-yearly, rather than monthly, to save on administration fees.

Keeping your insurance costs under control

There are many ways you can adjust your insurance cover to make it fit your budget without cancelling your insurance policy. For expert advice on ways to reduce your premiums, speak with a financial adviser or us.

If you’re having trouble making a premium payment due to financial hardship, we’re here to help. Call us on 13 65 25 between 8.30am to 6pm (AEST/AEDT), Monday to Friday, to discuss your options.