Whole of life insurance was once the norm in Australia but this type of insurance has been replaced with Term Life Insurance.  Historically, whole of life insurance was permanent life cover that held a cash value that you could surrender or cancel at any point during your policy and receive a cash payment.  In the event of a death, while holding a whole of life insurance policy, the insurer would pay out the amount insured like a normal life insurance policy.

While whole of life insurance is no longer available in Australia, you can still receive full life cover with a Term Life Insurance policy.  The difference being that a Term Life Insurance policy does not have a cash or surrender value, so it cannot be cancelled for a cash payment as the previous whole of life insurance policy.  However, the trade off is that the premiums for Term Life Insurance are much lower and affordable.

Term life cover offers the choice of stepped and level premiums.  By opting for level premium term life cover, the premium will remain constant up to retirement age 65 years.  Although initially level premiums may be higher at the start of your policy, gradually over time as you get older the premiums become significantly cheaper.

Naturally, as you get older you’re more susceptible to health risks and this is when you’re most likely to require life insurance cover.

Assuming you keep the term life cover amount the same this can provide you with a set insurance premium for many years to come.

Level premium cover provides a greater long term saving and in many cases can save you up to 50% of the total amount of insurance cover paid over your life time.

You should also be aware that while level premiums provide a fixed rate during the term of your policy and do not increase due to your age, your insurance provider may still increase premiums in line with Consumer Price Index (CPI) rates.

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