I'm young - do I need life insurance now?

You may think you're too young for life insurance, but maybe not.  

Life insurance is usually not something people think about until they begin to accumulate assets, debts and dependants. And there can be a fair amount of information to sift through, including some little known and commonly misunderstood facts.

But you shouldn’t leave it too late in life to think about your cover. By ensuring you have appropriate cover when young and fit, you could save yourself some hassle, and quite possibly some money, when you’re older.

You probably already have life insurance

Did you know there’s a good chance you already have some life insurance cover, as more than 70% of Australian life insurance policies are held inside super?1 But what do you need to know about this type of life insurance?

Understanding insurance within super

There are some benefits to having insurance within your super. It’s often cheaper2, because super funds purchase insurance policies in bulk. And if your premiums are deducted from your super, you won’t be dipping into your take-home pay.

Paying insurance premiums via your super, however, could decrease your super balance if your premium is not being offset by contributions. And if you make a claim, you may need to pay tax on the benefits paid to you.

It’s also important to recognise that the life cover provided by super funds is usually bought on a group basis, based on averages not individuals.3 If you – or your loved ones – need to claim on your policy you may find out you aren’t covered for everything you hoped you might be.  

Understanding stand-alone life insurance

The other option is to buy a stand-alone policy from an insurance company.

While this type of cover usually comes out of your take-home pay, it’s tailored specifically to you and can be adjusted to reflect your changing circumstances – such as buying a home or having children – to ensure your insurance remains suitable to your needs.

And where does ‘underwriting’ fit in?

An important part of the process for obtaining this type of cover is called underwriting, which typically involves completing an application form, possibly followed up by a phone call, to collect personal details such as your age, gender, health and medical history, and lifestyle information.

Using this information, the insurance company can accurately assess your risk, and set your premiums to reflect this, so you should never pay more than you need to.

The benefits of buying life insurance early

By buying insurance when you’re young you’re less likely to have exclusions applied, or to be declined cover, than you might be when you’re older and your health has deteriorated. You’re also less likely to have to pay higher premiums to cover particular health issues.

And once you’ve taken out stand-alone life cover, it will automatically renew each year regardless of changes to your health, until you either choose to cancel it or reach the maximum age under your policy.

Find out more

Learn more about life insurance, or use our insurance calculator to determine the level of cover you need.

For more help, contact your financial adviser. If you need help finding an adviser call us on 131 267 from 8:30am to 7pm (AEST) Monday to Friday, or use our find an adviser tool.


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© AMP Life Limited. It’s important to consider your particular circumstances and read the relevant product disclosure statement before deciding what’s right for you. This information hasn’t taken your circumstances into account. This information is provided by AMP Life Limited. Read our 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. All information on this website is subject to change without notice. Although the information in this article is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decisions. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.