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. AMP Life has other options to help if you’re struggling to pay your premiums due to financial hardship. Find out more here.

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 gain a quote, from your adviser or by calling AMP Life, to find out how much your insurance cover will cost if you change it.
Income protection – increase your waiting period

A ‘waiting period’ is the period of time between becoming disabled or ill, and when an income protection benefit starts being paid.

You may have accumulated extra sick or holiday leave that can provide an income buffer if you are unable to work due to sickness or injury. By increasing your ‘waiting period’ for example from 30 days to 60 or 90 days (longer waiting periods are available) you may reduce your premium.

Please speak to your financial adviser regarding your specific cover needs. You can gain a quote, from your adviser or by calling AMP Life, to find out how much your insurance cover will cost if you change it.
Income protection – Reduce benefit period

A benefit period is the length of time your income protection, or benefit is paid for, after a successful claim as long as you are disabled or ill, and unable to work.

As you get older or your financial situation changes you may not require the same benefit period you chose when you took out your policy. Reducing your ‘benefit period’ may make a reduction to your premium. For example:

  • Moving from a Lifetime benefit to an aged 65 benefit
  • Reducing your period from an aged 65 benefit to being paid a benefit for 5 years.
Please speak to your financial adviser regarding your specific cover needs. You can gain a quote, from your adviser or by calling AMP Life, to find out how much your insurance cover will cost if you change 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. Please speak to your financial adviser regarding your specific cover needs. You can gain a quote, from your adviser or by calling AMP Life, to find out how much your insurance cover will cost if you change it.
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 1

Paul is a 45-year-old single father with two children living at home, aged 12 and 15. He is working full-time on a salary of $80,000 a year and is paying $75 a month for his income protection insurance cover.

A long-term smoker, Paul finally makes the decision to quit. After 12 months of not smoking, he asks AMP Life to have his non-smoking status reassessed, and as a result his premiums for life insurance cover are reduced to $65 per month. Paul also decides to reduce his benefit period until his children are out of school, in order to help him stay on top of his premiums.

When Paul and his family move house, his finances are squeezed even tighter. To make it easier to keep up with his premium payments, Paul decides to change his waiting period from 30 days to 90 days. This gives Paul the time he needs to cover his extra costs and get himself into a better financial position and reduces his monthly premium further to $58.

Example 2

Renee is a 41-year-old high school teacher with 10 year old twins who attend a private school. Renee earns $94,000 a year and is paying $230 a month for his income protection insurance cover with a benefit amount of $5,900 per month until the age of 65.

When Renee’s husband is made redundant after only 3 years at his employer, they need to reassess their finances so that they can continue to pay their mortgage and their daughters’ school fees. They contact AMP Life and speak to them about reducing their income protection benefit period from up to age 65 to 5 years. As a result, their premium is reduced to $149 per month. Updating their insurance cover based on their needs allowed them to still remain covered whilst taking some pressure off their financial situation.

Warning: These examples are illustrative only and are not an estimate of the investment returns you will receive or fees and costs you will incur. These examples are 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) These examples do 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.

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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.

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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.