Life Insurance Eligibility
Different life insurance policies and policy types have different eligibility rules. The most common rule is a maximum entry age which prohibits those over a certain age from taking out a policy.
Another is pre-existing conditions. You may be denied coverage if you have a pre-existing medical condition, or you may be charged higher premiums.
Maximum entry age and expiry age
There is no standard maximum entry age for any policy and specialist insurers may offer higher maximums.
Expiry age is another number to watch out for. At this age, some policies will automatically cancel, while others will require an extra fee to continue your cover.
The values differ between insurers but this table provides a general guide of industry-standard ages:
| Type of cover | Maximum entry age | Expiry age |
|---|---|---|
Life insurance | 70-75 | 99 |
Funeral insurance | 55-60 | 79 |
Trauma insurance | 60-65 | 70 |
Income protection | 60-65 | 70 |
TPD insurance | 60-65 | 65 |
Pre-existing conditions
Generally, you can still get life insurance if you have pre-existing conditions, but in some cases, your provider may deny you certain types of policy, charge extra premiums, or deny coverage for any claims resulting from that condition. Pre-existing conditions can include:
- Diabetes
- Melanoma
- Kidney disease
- Stroke
- Cancer
- High blood pressure
- And many other conditions
Your life insurer will also look at several other factors when assessing your policy, which could include:
- date of diagnosis
- treatment
- your current health status
- your BMI
They do this to get a clear picture of your overall health and assess your risk as a policyholder - any pre-existing conditions form a part of this overall assessment.
If you’re shopping for life insurance and you have a pre-existing condition, you must disclose it to your insurer upfront.
If you don’t and your insurer finds out, they will deny any claim relating to that non-disclosure and could even cancel your policy.
Underwriting
Every insurance policy is subject to underwriting - where a professional analyses the risks involved with insuring you. Every insurer has different eligibility criteria and assesses risk in its own way.
If you are deemed to be high risk because of lifestyle or other factors (i.e. smoking, recent serious illness) you may be denied cover, your premiums may be set higher and/or you may be denied cover.
If one insurer denies you cover there’s a good chance another will accept you, particularly if you apply through a broker or advisor.
Where to buy life insurance
There are a few different ways to buy life insurance including:
Direct from an insurer
If you buy direct from an insurer you’ll have to find, compare and assess policies yourself. Usually, the best way to do this is by shopping online and either visiting each insurers site or using comparison tools.
If you’re confident that you know what you need and you’re willing to spend the time comparing policies and researching, this could be a good option for you.
Through an insurance broker or financial advisor
If you buy through a financial advisor or insurance broker they’ll assess your needs and find a policy that suits you.
They’ll offer expert advice and a wide range of policies to choose from.
If you’re not sure how much cover you need or which type of insurance is right for you this may be a good option for you.
Life insurance through superannuation
Many Australians have arranged life insurance through their superannuation and many super schemes automatically provide cover.
To check whether or not you have insurance you can:
- Call your superannuation provider.
- Log into your superannuation provider’s online portal.
- Check statements sent via email or mail.
Don’t choose this option just because it’s easy - make sure you consider everything on the market and shop around before selecting a life insurance policy.
Types of cover offered usually include:
- Income protection insurance
- Life cover
- TPD insurance
Significantly, your super will pay for your life insurance, so choosing this option may also put a dent in your retirement fund.
It’s also important to keep in mind that if your super balance dips below a certain level, or you don’t contribute for 16+ months your policy may be automatically cancelled.
The cost of life insurance
The cost of life insurance is different for everyone.
It depends on a variety of factors, including your health and circumstances, which policy you choose and your level of cover, just to name a few.
Risk and life insurance premiums
With life insurance the general rule is the higher risk you pose as a policyholder, the higher your premiums may be.
Your level of cover and policy type will also influence your premiums:
- Age: life insurance tends to cost more the older you are.
- Gender: males tend to pay higher premiums than females.
- Smoking: smokers tend to pay more than non-smokers.
- Medical history: pre-existing conditions and/or poor health may increase premiums, whereas a clean bill of health may mean lower premiums.
- Occupation: if your occupation is deemed high risk by your insurer you may be charged higher premiums.
- Level of cover: more comprehensive cover may mean higher premiums.
- Your hobbies: those with high-risk hobbies such as high-speed drivers or skydivers may pay more.
The policy you choose can also affect the cost of your premiums. Factors to consider include:
- Sum insured: the higher your sum insured, the higher your premiums will be.
- Stepped or level premiums: stepped premiums may be cheaper now and more expensive later while level premiums may be the opposite.
Research shows that cost is the most important factor for most Australians when choosing life insurance, but it’s not everything.
It may be more important to get a policy suited to you and your circumstances than it is to save a few dollars every month.
Continue reading our series of guides below to learn more about life insurance.
Life Insurance Starter Guide
On this page:
- Life insurance basics
- What does life insurance cover?
- Do you need life insurance?
- Benefits of life insurance
- How to choose the right cover
Types of Life Insurance
On this page:
- Life insurance policy types
- Whole term life insurance
- Life insurance policy add-ons
- The difference between trauma insurance and TPD
Choosing a Life Insurance Policy
On this page:
- Before you apply
- How much cover to choose
- Life insurance premiums
- Comparing life insurance policies
- Life insurance for seniors
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Shaun
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Shaun McGowan
Shaun is the founder of Money.com.au and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.
