Understanding Your Life Insurance Premium

Your life insurance premium is likely to change each year and you may wonder why. As a trusted insurer, we want to help you understand your premium. This guide gives you the facts: how your premium works, how we calculate it, and why it can change.

How your Life Insurance premium works

The regular payments you pay for your life insurance policy is called a premium. Your premium contributes to a shared pool of funds that helps to pay claims. It’s also used for expenses - such as staff, office space and other things that keep our business going.

We consider each policyholder’s circumstances to determine their likelihood of making a claim. That’s how we make sure each policyholder’s premium makes a fair contribution to the shared pool of funds. Another factor that can affect your life insurance premium is the application of inflation proofing increases.

Premium rates and policy fees are not guaranteed and may change over time.

Calculating your Life Insurance premium

We’ll base your premium on your circumstances, the cover you’ve chosen, your likelihood of making a claim, and the potential cost of the claim. That’s why each person’s Life Insurance policy may be different.

To calculate your premium, we use a number of risk factors. Some of the key risk factors to determine your likelihood of making a claim include:

Age

Customers are more likely to make a life insurance claim as they age. Generally, the younger you are, the lower your premiums tend to be, as insurers consider you to be at a lower risk for health complications or mortality.

Gender

Males and females have different life expectancies and claims likelihood. Life expectancy means the average number of additional years a person of a given age and gender could be expected to live. The chance of customers having a claim for Critical Illness cover and Permanently Unable to Work cover also differs by gender.

State of health

Your state of health when you apply for a life insurance policy, changes made to an existing policy and reinstatement of a policy are important as they help us decide whether to insure you and on what terms, including the premiums we charge. This is because your state of health affects the chance of having a claim.

Pastimes and occupation

Some hobbies and jobs are associated with higher chances of making a claim. When applying for a life insurance policy, making changes to an existing policy, or reinstating a policy, you’ll be asked about your pastimes and occupation. Depending on the risks associated with your hobbies or job, you may be charged an additional premium.

Type and amount of cover you select

Different types of cover come with different premium rates. This is because they involve various levels of risk for potential claims. Premiums also increase when the cover amount is higher. Allianz Life Plan includes Life cover, and the option to apply for Critical Illness cover and Permanently Unable to Work cover for added protection. These have age limits and eligibility criteria apply.

Whether or not you smoke

Smokers tend to have shorter life expectancies. A wide range of health complications are associated with smoking. As a result, life insurance premiums for smokers are higher than those for non-smokers. Quitting smoking may not only improve your health, but also help you save money on life insurance premiums in the long run.

Did you know, you can estimate how much cover you may need with our Life insurance calculator?

Why your Life Insurance premium may change

Have you noticed a change in your life insurance premium? Here are some factors that may influence your premium once your policy is in force.

Inflation proofing increases

We automatically increase your cover amounts by 5% or the change in the Consumer Price Index (CPI), whichever is higher. This happens each year on your policy anniversary. Insurers offer this feature so that inflation doesn’t erode the amount of your life cover over time. This means your premiums will also go up each year to reflect the increased cover amount. We stop applying these inflation proofing increases after the policy anniversary following your 65th birthday. You can decline an inflation proofing increase in a given year by contacting us.

Managing risk and changes to your policy

You can call us to make changes to your policy, add another person to it, or to inform us of variables that may affect it. Just as when you take out a life insurance policy with us, you have a duty to not make a misrepresentation to us when changing it.

These include:

Changing your cover amount

Increasing your cover amount can increase the risk for the insurance company, which leads to a higher premium. Reducing your cover amount may result in a lower premium but it decreases the level of cover provided if you make a claim.

Applying for non-smoking rates

These rates, which can reduce your premium, are available to people who have quit smoking more than 12 months ago.

Informing us of health, lifestyle and occupation changes

You can ask us to consider removing or amending any Special Terms and Conditions by contacting us. We'll review your request based on the information about your current circumstances.

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Disclaimer

This article has been prepared by Allianz Australia Insurance Limited ABN 15 000 122 850 AFSL234708 (“Allianz”). In some cases, information has been provided to us by third parties and while that information is believed to be accurate and reliable, its accuracy is not guaranteed in any way.

Any opinions expressed constitute our views at the time of issue and are subject to change. Neither Allianz, nor its employees or directors give any warranty of accuracy or accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in this article.

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Allianz acknowledges Aboriginal and Torres Strait Islander peoples as the Traditional Custodians of the lands on which we live and work across Australia. We pay our respect to First Nations Elders past and present.

Any advice here does not take into account your individual objectives, financial situation or needs. Terms, conditions, limits, and exclusions apply. Before making a decision about this insurance, consider the relevant Product Disclosure Statement (PDS)/Policy Wording and Supplementary PDS (if applicable). Where applicable, the PDS/Policy Wording, Supplementary PDS and Target Market Determination (TMD) for this insurance are available on this website. We do not provide any form of advice if you call us to enquire about or purchase a product.

Allianz Australia Insurance Limited ABN 15 000 122 850 AFS Licence No. 234708 is the insurer of any general insurance products offered, and Allianz Australia Life Insurance Limited ABN 27 076 033 782 AFS Licence No. 296559 is the insurer of any life insurance products offered. Each entity is responsible for any statements and representations made about its products, on this website.

Understanding your Allianz Life Insurance premium