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Insurance affordability

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. 

Insurance may seem like one of those expenses that are not important until you need it. Depending on your policy, most insurance premiums increase every year based on your age and any indexation increase on your benefit amount.

If you’re looking to save money, your insurance policy can adapt to your needs over time. There are ways you could reduce your premium costs while still staying covered. 

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 which could increase your premiums, or may not be allowed at all.

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

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 or pastimes
  • Payment frequency
  • Stamp duty
  • General health
  • Benefit amount
  • Waiting period and benefit period
  • 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 made changes, you can ask for your insurance policy to be reassessed.

You may also like to read more information about life insurance, total & permanent disablement, income protection and trauma cover.

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.
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 illness 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 get a quote to find out how much your insurance cover will cost if you reduce 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 2 or 5 years.
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 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 or using nicotine replacement products and don’t smoke any other substance, including vaping for more than 12 months and have no illnesses caused or made worse by your smoking habits, 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, which is a percentage increase in the cost of the premium. If you worked in a dangerous occupation and you have changed to a less hazardous one, we may be able to reassess your occupation, subject to underwriting. If you have changed to a less hazardous occupation, you can ask us to reassess your premiums.
Declining indexation To protect your benefit against inflation, your sum insured and/ or monthly benefit is automatically increased each year until you reach age 65. As a result, your premiums also increase. You can call us to decline the indexation increase in the sum insured and/ or monthly benefit. It’s important to note that this won’t take effect until your policy’s next anniversary.
Restructure your insurance from standalone to linked

If you have more than one type of cover for the same insured person, you can choose to make the covers either standalone plans or link them under the same plan. Standalone plans generally have a higher premium than linked cover.

If a benefit under a linked option (such as a TPD or trauma option) is paid, that payment reduces the sum insured of each linked cover (such as a life insurance plan) for that insured person. 

For example, you have $1.25 million in a life insurance plan and $250,000 on a linked trauma option. If you made a
Trauma claim and the full benefit of $250,000 is paid, your Life Insurance Plan will be reduced to $1 million.

Alternatively, under a standalone plan, if a benefit is paid it does not impact any other insurances you may have. For this reason, standalone plans are more expensive.

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 restructure it.
Request a reassessment of health loadings

For certain medical conditions and injuries, a health loading can be applied. A health loading is a percentage increase in the cost of the premium.

If you had health concerns when you originally purchased your insurance, such as high cholesterol, and your health has since improved, you may be able to reassess your health loading, subject to underwriting.

If your health has improved, you can ask us to reassess your insurance.
Request a reassessment of pastime loadings Certain pastimes, such as football and motor sports, are risky and you may have had a loading applied to your insurance to compensate for that extra risk when your originally purchased it. As you have gotten older you may no longer be participating in these types of pastimes so you can request a reassessment to see if you’re eligible for a reduction in your premium. If your pastimes have changed, you can ask us to reassess your insurance.
Change the tier of your policy Some insurance products are tiered – top tier products include all the bells and whistles but are generally more expensive than lower tier products. If you want to change the tier of your policy, you may have to cancel your policy and start a new one. Talk to your adviser about changing the tier of your insurance and whether it is suitable for you.
Decrease your payment frequency Most insurance products charge a fee if you pay your insurance premiums more frequently than annually. You can ask us to change your payment frequency.


Get the protection you need

While you want to make sure your premiums are affordable, it’s also important to feel confident that you and 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 during an emotionally challenging time. The value of this cover can be priceless.

That’s why maintaining the right level of protection for your circumstances is important so you can have total peace of mind knowing you and your family will always be financially taken care of. Before you make any changes to your life insurance, it’s best to review your cover carefully with the help of your financial adviser or you can call us on 133 731.

Customer examples

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 $100,000 a year and is paying $95 a month for his income protection insurance cover.

A long-term smoker who has been trying to quit for some time, Paul finally succeeds in quitting. After 12 months of not smoking, he asks AMP Life to have his smoking status reassessed, and as a result his premiums for life insurance cover are reduced to $73 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 $46. That’s a total saving of $49 per month for Paul.

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 her 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 monthly premium is reduced to $149 – saving them $81 per month. Updating their insurance cover based on their needs allowed them to still remain covered whilst taking some pressure off their financial situation. 

Renee is aware that she will need to be underwritten again if she wants to reinstate her insurance to its previous levels.

Please note 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) The example does not take into account any fees and costs associated with insurance.

Important information

AMP Life Limited ABN 84 079 300 379, AFSL No. 233671 (AMP Life), has proudly served customers in Australia since 1849. AMP Limited ABN 49 079 354 519 (AMP Limited) 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.

Any advice and information on this website is general in nature and is provided by AMP Life, which is part of the Resolution Life group. The advice does not take into account your personal objectives, financial situation or needs. Therefore, before acting on the advice, you should consider the appropriateness of the advice, having regard to those matters as well as the relevant product disclosure statement (PDS), available from AMP Life at amplife.com.au or by calling 133 731, before making a decision about the product. Consider speaking to a financial adviser if you have any concerns.

AMP Elevate insurance is jointly issued by Equity Trustees Superannuation Limited ABN 50 055 641 757, AFSL No. 229757 RSE Licence L0001458 (ETSL) as trustee for the National Mutual Retirement Fund ABN 76 746 741 299 and AMP Life.

If you decide to purchase or vary a financial product, AMP Life and/or other companies within the Resolution Life group will receive fees and other benefits, which will be a dollar amount or a percentage of either the premium they pay or the value of their investments. You can ask us for more details.

AMP Life is part of the Resolution Life group and can be contacted on 133 731 or via the contact us page.