How Term Life Insurance Australia Works

Are you wondering how term life insurance in Australia works?

Term Life Insurance provides protection and financial security for you and your loved ones if you should die.

Term life is generally considered the least expensive, easy to understand option for life insurance protection.

The following provides a brief review of the Key Elements relating to How Term Life Insurance Australia Works…

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Life Insurance Australia

Term Life Insurance Australia

Term Life Insurance Australia – An Example

  • 20 Year Level Term Life Insurance Policy.
  • Policy Face Amount of Policy – $100,000
  • Annual Policy Premium – $500
  • You pay the same premium ($500) each year for 20 years and your life insurance benefit remains the same ($100,000) for 20 years.
  • If you pass away before the end of the 20 year term your beneficiaries receive a tax-free, lump sum distribution of the face amount of the term life insurance policy.

If you are alive at the end of the 20 years your term life insurance policy expires. Here’s how you can request a free life insurance quote…

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 Life Insurance Australia

Life Insurance Australia

Policy Term or Length of Policy

Standard options include 5, 10, 15, 20, 25 0r 30 years. As long as the policy remains in force, if you die your beneficiaries receive the death benefit…

No Cash Value or Accumulation

There is no cash build up or accumulation within the policy for a term life insurance policy. The coverage is generally less expensive than whole life since there is no cash value building within the policy.

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Life Insurance Australia

Life Insurance Australia

Convert Term Life to Permanent Life

Some Term Life Insurance policies allow you to convert the coverage to a permanent life policy at the end of the policy term.
In addition, they may not require a physical exam of evidence of insurability.
Consider whether you will need to renew your coverage before you buy, as term life insurance may be much more expensive 10 or 20 years down the road depending on your health, and whether or not you will be insurable.

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Renewable Term

The annual premium begins at a lower level than some other types of term life, but as you renew each year the premium increases…

Level Term

Annual premium and death benefit remain the same for a specified period of years, such as 5, 10, 20 or 30 years.

Policy Comparison

Life Insurance Australia

Life Insurance Australia

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Annual Renewable Term Life policies initially start with a lower annual premium that increases over the policy period.
Level Term Life policies have an annual premium that remains the same over a specified period of years.
The total premium paid over the life (for example – 20 years) of a term life policy may be much less for a Level Term Life policy compared to the total premium paid for an Annual Renewable Term Life policy.

Length of Coverage

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Individuals with a need to provide protection of term life insurance for a limited numbers of years, such as 5 years to cover a car payment, or 7 years to cover the remainder of a mortgage may find Annual Renewable Term Life to be more affordable.
Individuals with a need to provide protection of term life insurance for a longer period, such as 10, 15 or 20 years, until the children graduate for example, may find Level Term Life Insurance to be more affordable.

Final Analysis: Term Life Insurance provides affordable protection at reasonable cost with the maximum benefit for you and your family. You can take the money you save on Term Life Insurance and invest it for the future…