Life insurance for young adults

Key takeaways

• Life insurance can be relevant earlier in life, depending on your financial responsibilities
• Available cover options include life insurance and optional serious illness insurance, with income protection insurance as an additional product to consider
• Your cover needs can change as your income, debts and family situation change

Starting out in your career can be exciting. You may be earning a steady income for the first time, making plans for the future, and getting more confident about your finances. But alongside that independence often comes a growing list of responsibilities – from rent and bills to loan repayments and the everyday costs of living.

That’s why life insurance may be worth thinking about. It is often seen as something for later in life, but if you already have financial commitments or people who depend on you, exploring what cover may suit your circumstances could make sense now. 

Why should young adults consider life insurance?

When you’re building a future for yourself, putting the right safety nets in place can be part of protecting everything you’re working towards. Whether life insurance is worth considering often comes down less to your age and more to your circumstances – like your financial commitments, dependants and the life you’re starting to create. Taking out cover earlier may also mean applying at a younger age and in better health, which can affect premiums.

Keep reading: Why you could consider life insurance

If you’re single with no dependants

If you’re single and no one relies on your income, life insurance may be less of a priority right now. Some young adults may also choose to look into life insurance earlier, as applying at a younger age may affect premiums. It could also help reduce the chance of leaving a financial burden to parents or a partner if something unexpected happens.

If you have a mortgage or debt

You may not have a mortgage in your 20s, but you could be working towards one. Many people in their 20s are saving towards a home or apartment and starting to picture the life they want to build. As those plans take shape, life cover may be one way to help protect that future. If you already have a mortgage or another major debt, such as a student loan, it may help provide financial support, so your loved ones are not left to carry those costs alone.

HELP debt operates differently from other forms of debt, such as mortgages and personal loans. If you’re unsure how different financial commitments may affect your circumstances, consider speaking with a qualified financial professional.

If you’re self-employed or a sole trader

Building something of your own can be exciting. You might be freelancing, running a start-up, or turning a side hustle into a business. Many younger Australians in these roles may not think of themselves as self-employed or sole traders, but if your income depends on your ability to work, having a financial safety net may be worth considering.

If illness affects your ability to work, having the right cover in place may help ease some of the financial pressure. That could help with ongoing living expenses, debt repayments and other everyday costs while you focus on recovery. 

If you have dependants

If a partner, children or family members rely on your income, life insurance may be an important type of cover to consider. Life insurance can provide a lump sum if you pass away.

Keep reading: Life insurance for young families

When should young adults get life insurance?

A simple answer is before you need it. For many young adults, the right time to review cover is when your responsibilities change. For example:

Starting your first full-time job

Often when young Australians first come across life insurance through super. It is worth checking what cover you already have and whether it suits your needs.

Getting married or entering a de facto relationship

When you start sharing finances or other commitments, both partners may want to review their cover, especially if one relies on the other’s income.

Having children

Having children could be another reason to review life cover. A young family may need to think about living costs, debts and how they would cope if one parent could no longer work or passed away.

Types of life insurance cover for young adults

Different types of insurance are designed for different situations. These include:

Life insurance

Life insurance may provide a lump sum to your beneficiaries if you pass away, and some policies also pay a benefit if you are diagnosed with a terminal illness. For young adults without dependants, it may be a lower priority but getting cover earlier can still matter because premiums are generally influenced by age, health and lifestyle.

Serious illness insurance

Serious illness insurance is an optional cover available with a Real Life Insurance policy for an additional premium. It can pay a lump sum if you are diagnosed with a covered serious illness, such as a severe heart attack, cancer or stroke. The payment can be used however you need, whether that is for treatment, recovery costs, travel or time away from work. 

How much life insurance do you need?

There is no set amount of life insurance that suits everyone, and cover needs can vary depending on factors such as income, debts, dependants and future expenses. You may also wish to explore Moneysmart’s life insurance calculator for general information about cover amounts.

Stepped vs Level Premiums

You may see stepped and level premiums mentioned when comparing life insurance. Stepped premiums usually start lower and increase over time as you get older, while level premiums usually start higher but are generally more stable over time.

Real Life Insurance premiums are calculated based on factors such as your age, health and lifestyle. 

Additional products for young adults

Income protection insurance

Income protection insurance pays a regular monthly benefit if you get sick or injured and can’t work. Real Insurance may cover up to 70% of your monthly pre-tax income, up to $15,000 per month, depending on your circumstances.

This type of cover may help manage everyday expenses and ongoing financial commitments while they’re unable to work. Check the Product Disclosure Statement (PDS) for full details.

Keep reading: How does income protection insurance work? 

Income protection insurance through super vs direct cover

The table below outlines some general differences between income protection insurance through super and direct cover. 

Learn more: Income protection insurance through super vs direct

Protect the life you’re building

Real Life Insurance may be suitable for young adults looking to help provide financial support for the future they’re building. You can apply from age 18, and the process is designed to be straightforward. Request a quote now to get started. 

Frequently asked questions

Can I get life insurance as a student or casual worker?

Yes, it’s possible to get life insurance even if you’re a student or working casually. Life insurance policies may not require full‑time employment, and eligibility is usually based on factors like age, residency, health, and lifestyle, rather than your job status or income stability alone.

Is a life insurance payout taxed in Australia?

Usually, life insurance payouts may be tax-free for a financial dependant, such as a spouse or child. Tax may apply if the benefit is paid through super to a non-dependant. For personal guidance, speak with a financial adviser or the ATO.

Can I increase or change my cover as my life changes?

You can generally review your cover as your circumstances change. It is worth reviewing after major life events, like marriage, pregnancy, work promotion or a divorce.

What happens if I miss or stop a premium payout?

If you miss or stop paying your life insurance premiums, your policy may eventually lapse, which means you’re no longer covered. What happens next depends on how long the payment is overdue and the terms outlined in your policy’s Product Disclosure Statement.

Can I hold multiple life insurance policies in Australia?

Yes, you can generally hold more than one life insurance policy in Australia, including cover through your superannuation fund and policies you get directly. When applying, it’s important to disclose any existing life insurance so your insurer can properly assess your application. Depending on the policy terms and claim circumstances, multiple policies may pay a benefit.