Are you thinking about whether you can afford your insurance premiums?

You're in control, here's some things you can consider

We all know that life insurance can make a world of difference at a time when you and your family need it most. But insurance premiums are an expense, and if you’re looking for a way to save money you may sometimes wonder if you’re better off without it.

If you feel like the premium you’re currently paying is higher than you can afford, there are ways you could reduce your premium costs while keeping your insurance.

This may give you time to recover from a financial setback and get your budget back under control.

Before making any changes, you should check your policy carefully or speak with your financial adviser. If you decide to add some cover benefits back after they have been removed, this may require underwriting and could increase your premiums higher than they were previously.

How your premiums are calculated

There are a wide range of factors that affect how much you pay in premiums. These include:

  • Age
  • Gender
  • Smoker status
  • Medical history
  • Occupation
  • Payment frequency
  • Stamp duty
  • General health
  • Benefit amount
  • Extras

While you can’t change some of these factors, such as your age, it’s worth looking at whether you could make other changes to your life that may affect how much you’re paying for life insurance. If you’ve already done this, you can ask for your insurance policy to be reassessed.

Ways to reduce your premium costs

As well as examining the factors that are used to calculate your insurance premiums, there are some specific actions you could take to reduce how much you’re paying:

Action What it means What you can do
Reduce how much cover you have As we move through different life stages, the amount of insurance required can change. For example, you have paid off your mortgage, children have finished school, etc you may not need as much cover. Please speak to your financial adviser regarding your specific cover needs. You can get a quote to find out how much your insurance cover will cost if you reduce it.
Removing extras Your life insurance policy may include extra optional features – like premium waiver, – which carry additional costs. Removing extras that you no longer require can help reduce your premiums, though it does remove the benefit of the respective option. You can ask us to remove the optional extras in your cover. But remember that if you do cancel these extras, you will not be able to exercise them.
Changing your smoking status Smoking puts your health at risk – which is why it will impact the amount of your premiums. If you change from a smoker to a non-smoker status, it may reduce your premiums. If you’re not a smoker, check your policy schedule to ensure your details are correct. If you have stopped smoking for more than 12 months and have no smoking-related illnesses, you can ask to be reassessed.
Paying premiums through your super

Most insurance policies give you the option of paying your insurance premiums either directly, or through your super. If you pay through your super, you won’t have to pay for your premiums out of your take-home pay – but keep in mind that this will reduce the amount you have available for your retirement.

It’s important to be mindful that a condition of release must be met before any proceeds can be paid out under super law so it could be harder to get a payment. For example, if you are not working at the time you suffer an injury or illness you may not be paid an income protection benefit. There may also be implications for your beneficiaries.

If you want to start paying premiums through your super, you will have to cancel your policy and start a new one. Talk to your adviser about structuring your policy through your super and whether it is suitable for you.
Changing to a less hazardous occupation Some insurance policies for dangerous jobs include a loading – a percentage increase in the cost of the premium. If you work in a dangerous occupation and you change to a less hazardous one, we may be able to reassess your loadings, subject to underwriting. If you change to a less hazardous occupation, you can ask us to reassess your premiums.
Declining indexation To protect your benefit against inflation, your sum insured is automatically increased each year until you reach age 65. As a result, your premiums also increase. You can ask us to decline the increase in the sum insured from indexation in any year. It’s important to note that this won’t take effect until your policy’s next anniversary.


Get the protection you need

While you want to make sure your premiums are affordable, it’s also important to feel confident that your loved ones will be looked after financially if you were injured, suffer a trauma, become terminally ill or pass away. Your life insurance can help relieve financial hardship for you and your family during an emotionally challenging time. The value of this cover can be priceless.

That’s why you need the right level of protection for your circumstances – so you can have total peace of mind knowing your family will always be taken care of, no matter what happens. Before you make any changes to your life insurance, it’s best to review your cover carefully with the help of your financial adviser.

Example

Mary is a 38-year-old single mother with two children living at home, aged 12 and 15. She is working full-time on a salary of $80,000 a year and is paying $75 a month for her income protection insurance cover.

A long-term smoker, Mary finally makes the decision to quit. After 12 months of not smoking, she asks AMP Life to have her non-smoking status reassessed, and as a result her premiums for life insurance cover are reduced to $65 per month. Mary also decides to decline indexation each year until her children are out of school, in order to help her stay on top of her premiums.

When Mary and her family move house, her finances are squeezed even tighter. To make it easier to keep up with her premium payments, Mary decides to change her waiting period from 30 days to 60 days. This gives Mary the time she needs to cover her extra costs and get herself into a better financial position.

Warning: This example is illustrative only and is not an estimate of the investment returns you will receive or fees and costs you will incur. This example is based on the following assumptions (a) The cover amount remains the same through-out the period and the policy is not cancelled or suspended.; (b) No waiting period applies to the policy; (c) All figures are gross of tax. No allowance is made for tax circumstances, the taxation and Medicare levies on insurance benefits, or social security benefits; (d) The example does not take into account any fees and costs associated with insurance.

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If you have any questions about your insurance, speak to your financial adviser or call AMP Life.

AMP Life

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Important information

Products in the Super Directions Fund and the Wealth Personal Superannuation and Pension Fund are issued by N.M. Superannuation Proprietary Limited (N.M. Super) ABN 31 008 428 322 (trustee), which is part of the AMP group (AMP). Before deciding what’s right for you, it’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions available from AMP at amp.com.au or by calling 131 267. Read AMP’s Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you.

Products in the AMP Eligible Rollover Fund, National Mutual Retirement Fund, and NM Pro Super Fund are issued by Equity Trustees Superannuation Limited ABN 50 055 641 757 (trustee). Risk products are issued by AMP Life Limited ABN 84 079 300 379 (AMP Life), which is part of the Resolution Life group. AMP Life has proudly served customers in Australia since 1849. AMP Limited ABN 49 079 354 519 has sold AMP Life to the Resolution Life group whilst retaining a minority economic interest. AMP Limited has no day-to-day involvement in the management of AMP Life whose products and services are not affiliated with or guaranteed by AMP Limited. AMP Limited is not liable for products issued by AMP Life or any statements or representations made in the PDS for those products. “AMP”, “AMP Life” and any other AMP trademarks are used by AMP Life under licence from AMP Limited. Before deciding what’s right for you, it’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions available from AMP Life at amp.com.au or by calling 133 731. Read AMP Life’s Financial Services Guide for information about our services, including the fees and other benefits that AMP Life and/or other companies within the Resolution Life group may receive in relation to products and services provided to you.

Any advice and information provided is general in nature, hasn’t taken your circumstances into account, and is provided by AWM Services Pty Ltd ABN 15 139 353 496 (AWM Services), which is part of the AMP group (AMP). All information on this website is subject to change without notice.

Life Insurance Code of Practice

The Life Insurance Code of Practice is issued by the Financial Services Council (FSC) and sets out the life insurance industry’s commitment to high customer service standards, consistency and principles of conduct.

As a member of the FSC, AMP supports the Life Insurance Code of Practice. You can find more information here.