How to Manage Life Insurance Premiums
Taking out a Life Insurance policy is an investment – providing you with the peace of mind that comes from knowing your loved ones will have assistance to cope financially if you pass away. However, with the ongoing cost-of-living crisis, Australians are looking for ways to reduce their spending but still stay financially secure.
The good news is there are ways you can ensure your life insurance policy is cost effective, which we will outline in this article.
What are life insurance premiums?
Life insurance premiums are the regular payments that you need to make to maintain your insurance coverage. The premium amount is determined by a number of factors, which we will look at in the next section.
If you’re curious to know how much it might cost to get a life insurance policy from NobleOak, based on your particular circumstances, you can get a quote in under 2 minutes, by visiting our online quote tool.
2025 insights into life insurance premiums
NobleOak recently conducted research into life insurance in Australia, with findings published in our 2025 Life Insurance Pulse Report.
One significant finding is that 76% of Australians would prefer a fully underwritten Life Insurance policy to a partially underwritten policy – meaning that the majority of us are willing to undergo a more lengthy application process in order to receive cover which fully considers their health and lifestyle risks. Fully underwritten policies incur more calibrated premiums than partially underwritten policies (where the insurer only asks a few questions during the underwriting process), while providing greater certainty at claims time – both of these factors are valued more than speedy application approval.
The 2025 Pulse Report also saw an increase in our perceived levels of health – this year 59% of Australians considered themselves to be healthy, which has increased from 55% in the last report. Those aged 30-34 are most likely to perceive themselves as healthy. In addition to this, 21% said their health was better than last year (up from 19% in the last report) and fewer people said their health had declined from the year previous (16% compared with 20% in the report previously).
However, amongst those planning to get life insurance in the next 5 years, the top life events prompting them to get life insurance were a serious illness diagnosis, having an accident or someone close to them dying unexpectedly. Ironically, given that health is a key factor in the cost of Life Insurance, if you are healthy, it’s actually a better time to apply for a life insurance policy. Keep reading to learn about factors that affect the cost of insurance, and how you can ensure your Life Insurance premiums are cost effective.
Factors that influence life insurance premiums
Life insurance premiums are calculated based on several key factors that assess your level of risk. If the insurance company deems you to be ‘higher risk’, this means that they think there is a statistically higher chance that a claim will be made on your policy based on historical trends. The higher the probable risk, the higher the premiums tend to be.
These are the main factors that influence the cost of life insurance:
- Age: The younger you are when you take out a policy, the lower your premiums typically are, as younger individuals statistically pose a lower risk.
- Health status: Medical history, body mass index (BMI), and pre-existing conditions play a significant role in determining premiums, with healthier individuals generally paying less.
- Smoking status: Smokers are at higher risk for health conditions, which leads to higher premiums compared to non-smokers.
- Occupation and hobbies: High-risk jobs (e.g., construction, mining) and extreme hobbies (e.g., skydiving, scuba diving) can increase premiums due to the greater likelihood of injury or death.
- Coverage amount: The higher the amount of cover you take out, the more you usually pay in premiums.
Tips to keep your life insurance premiums cost effective
If you want cost effective insurance premiums, this section provides useful tips. These factors are especially useful to know when you’re taking out a life insurance policy for the first time.
1) Choose the right coverage for your needs
The easiest way to keep insurance premiums cost effective is to make sure your policy provides enough coverage for your needs – instead of more than what you need.
For example, say that the outstanding debt on your mortgage is $500,000, and the cost of your children’s ongoing education is $300,000. This means that your family will roughly need $800,000 to cover these expenses if you were to pass away (at today’s prices). Although it might seem like a good idea for the payout to be higher – so your family will have extra money – the reality is your insurance premiums will be more expensive.
When you’re applying for a life insurance policy, it’s a good idea to look at your finances and calculate how much money your family would need (taking into account inflation and growth or reduction of liabilities). Many people overestimate how much coverage they need, so taking the time to assess your specific situation is recommended.
For those who have an existing policy, it’s a good practice to adjust from time to time – especially after reaching a life milestone (such as paying off your mortgage). This can help to lower your premiums as your financial obligations decrease.
2) Consider a fully underwritten policy
NobleOak offers life insurance that’s fully underwritten – meaning that we take the time to assess the details of your situation so we can offer you a policy that’s tailored to your needs. The application process for fully underwritten policies is slightly longer (compared with partially underwritten policies), but the key benefit is that you will know what you’re covered for and have more certainty at claims time.
When the insurer has a complete picture of your health, they can assess risk more accurately, which often results in lower life insurance premiums for people who are in good health. If you’re in good health or can improve your health before applying, you’re more likely to qualify for better rates. Additionally, since the insurer has a clearer understanding of your risk level, they are less likely to build in extra costs to compensate for unknown factors.
Visit our guide for more information: What is fully underwritten Life Insurance?
3) Improve your health and lifestyle
At NobleOak, one of the questions we get asked most frequently is: How can I pay less for my policy? In many cases, the easiest way to ensure your life insurance premium is cost effective is to make healthy lifestyle adjustments.
Insurers assess risk based on factors such as weight, fitness level, and overall health. Because being overweight or having a high body mass index (BMI) can increase the likelihood of health conditions like heart disease or diabetes, these factors can increase the cost of life insurance.
Additionally, lifestyle habits such as smoking and excessive alcohol consumption also have a significant impact on insurance costs. For instance, smokers often pay much higher premiums due to the well-documented health risks associated with tobacco use, but many insurers offer lower rates to those who haven’t smoked for at least 12 months.
By making diet and lifestyle improvements, you not only improve your quality of life but also reduce the cost of Life Insurance when you first apply.
Find out more here: Investing in wellness: How healthy life choices can potentially lower your insurance premiums.
4) Compare life insurance quotes
Shopping around and comparing different life insurance providers can help you find the best coverage at the most competitive rate. Insurers assess risk differently, meaning premiums can vary even for the same level of coverage.
Some providers offer discounts or incentives for healthy lifestyle choices, such as lower premiums for non-smokers, active individuals, or those who undergo regular health check-ups. By exploring multiple options, you can identify insurers that reward healthy habits and provide more favourable terms.
To find out how much you might pay for life insurance with NobleOak, use our online quote tool. You can also learn more in our guide: How to Compare Life Insurance in Australia.
5) Select the right type of life insurance policy
The type of policy chosen will also affect the premium amount. NobleOak offers the following types of insurance:
It’s important to consider your situation and which product or bundle of products is best for you. This will prevent the possibility of paying for insurance that isn’t quite right for you.
6) Consider using the same insurer as your partner
Couples can often reduce their life insurance costs by taking out policies with the same insurer. Many life insurance companies offer multi-policy discounts or streamlined application processes for partners who apply together. This can make managing your policies more convenient while also lowering premiums.
Another cost-saving benefit of choosing the same insurer is access to special offers. At NobleOak, if one partner took out a NobleOak Life Insurance policy through a limited-time discount or special promotion, and that offer is still available, NobleOak will generally extend the same discount to the other partner. This can lead to significant savings on premiums while ensuring both people receive high-quality individual cover.
7) Review and update your policy regularly
Life circumstances change over time, and your life insurance policy should reflect your current needs to avoid overpaying for unnecessary coverage. If your initial policy was based on protecting your family from significant financial burdens, you may find that as your obligations decrease, so too can your level of cover. Similarly, as children grow up and become financially independent, you may not need the same level of life insurance you originally took out to secure their future. If your primary reason for coverage was to provide for dependents in the event of your passing, you may choose to reduce your sum insured or adjust your policy accordingly.
You might also want to compare your current renewal notice against competing insurers. As your situation changes, the insurer you currently have might no longer be the right one for you. Bear in mind however that when you change insurers you will need to go through some level of underwriting again, so if your medical situation has changed from when you first took out life insurance products, it may not be worth it.
8) Other options to reduce your current cover
There are a number of other options that may be available to you to manage the cost of your premiums but still stay protected if you are facing difficult financial times. These include:
- Opting out of CPI: Benefit amounts and premiums are usually automatically increased at each anniversary based on the increase in the Consumer Price Index (CPI) or 3% (whichever is the greater), known as indexation. You can request to have automatic CPI increases switched off, which will prevent the cover increase (and the corresponding premium increase, for the greater amount of cover) occurring from your next anniversary. This means your sum insured will no longer increase in line with CPI automatically at each plan anniversary date. However, you will have the option to switch the increase back on in the future, at renewal time, if you decide to do so.
- Asking for a premium waiver: If you were experiencing financial hardship while holding a life insurance policy, your life insurer might be able to waive your premiums for a number of months, keeping your insurance cover in place at a difficult time. You will probably need to provide supporting documentation to assist with your financial hardship application.
- Income Protection options: Increasing your waiting period (the time you wait before benefits start to be paid to you if you became sick or injured and were unable to work) or reducing your benefit period (the amount of time you would be paid a benefit amount if you became sick or injured and were unable to work) will reduce your premium costs.
Outstanding Value Life Insurance
NobleOak has won the Canstar Outstanding Value Award for Direct Life Insurance ten years in a row thanks to our dedication to offering high-quality Life Insurance at competitive prices.
Our goal is to strike the right balance between affordability and comprehensive coverage. With a legacy of simplicity and reliability, NobleOak remains a trusted provider for Australians seeking reliable insurance cover to help safeguard their family’s financial future.
Ready to get started? Use our online quote tool or give us a call on: 1300 041 494.
Any financial product advice is general in nature only and does not take into account your individual circumstances, objectives, financial situation, or needs. Before acting on it, please consider the appropriateness of the information, having regard to those factors. Any third party websites or tools referred to are subject to their own terms and conditions and NobleOak Life Limited makes no representation or warranty as to any information on those websites. Persons deciding whether to acquire or continue to hold life insurance issued by NobleOak Life Limited should consider the relevant Product Disclosure Statement and Target Market Determination for the product. NobleOak Life Limited ABN 85 087 648 708 AFSL 247302.