What is direct term life insurance?

Direct term life insurance is a policy that covers you if you were to pass away or are diagnosed with a terminal illness for a fixed number of years or reach a certain age or whichever comes first. You can purchase this type of cover directly from an insurer without going through an agency or broker.

How does term life insurance work?

Term life insurance pays a lump-sum benefit to your loved ones if you pass away or become terminally ill during the cover period (term). This money can help your loved ones keep up with the everyday cost of living when you’re gone, or go towards any final expenses such as your funeral.

A term life insurance policy will eventually expire, although the upside is that it can be easy to get approved with some term policies. For example, with Real Term Life Cover, you only need to answer some simple health questions when you apply.

You can choose to take out cover for yourself (single plan) or choose to include your partner (joint plan). So, if you and your partner both take out cover, you can rest assured knowing you’re both covered.

The amount of money that your loved ones will receive depends on the cover amount you choose. You should also remember some providers will limit your cover amount you can apply for depending on your age.

Types of term life insurance

Term life insurance in Australia is offered in a few different ways depending on the insurer and the way the policy has been designed. One of the biggest and most important differences you need to be aware of is how your premiums are calculated for each policy. Generally, life insurance premiums are either stepped or level. Choosing the right option for you can help you get the best possible value from your cover.  

Level term life insurance

With level term life insurance, your premiums may start out slightly more expensive but remain the same over the life of the policy (unless you change your cover amount). Premiums will be calculated based on your age at the time you apply.

The biggest advantage of level term life insurance is that it’s easier to control and predict the cost. Since your premiums won’t increase every year due to inflation or your age, you will always know exactly how much you need to pay.

Stepped term life insurance

Stepped life insurance premiums can start out slightly cheaper and then will increase every year based on your age. Premium and cover adjustments may also be made to reflect the Consumer Price Index (CPI). 

Also, it may be beneficial to look into life insurance sooner than later. This is because as you get older and could experience health issues, the insurer may apply a premium loading or special exclusion to your policy, or you may even find that some insurers will decline to offer you cover.

Real Term Life Cover

Real Term Life Cover allows you to choose your cover amount between $10,000 and $100,000, and if death is accidental this Benefit Amount will triple (to a maximum of $300,000 payout). Real Term Life Cover will expire after a set amount of years, which is 20 years (the “term”) or when you reach 85, whichever comes first. It also comes with a guaranteed cash payout once your cover expires and the Life Insurance Benefit ends.

This means:

  • Your protection continues for another 10 years with our Final Expenses Benefit. This benefit is equal to 20% of your Life Insurance Benefit and is at no additional cost to you!
  • After this time (or if you pass away during this period) you or your family will receive your Final Expenses Benefit in full.
  • Or for greater flexibility, at any time during this 10-year period, you can choose to end your policy and receive a guaranteed payout of half the Final Expenses Benefit.

It’s important to note that if your cover ends before your Life Insurance Benefit expires, you won’t be eligible for the Final Expenses Benefit or the guaranteed cash payout.

To apply, you simply have to answer a few questions over the phone, and you won’t be asked to complete complex paperwork, or go for any blood tests. The cover is for Accidental Death in the first 12 months of your Policy, then you’re covered for death by any cause and diagnosis of a terminal illness after this time.

It’s easy to get a Term Life Cover quote

Term Life Insurance compared to other types of life insurance policies

Differences with term life insurance versus other types of life insurance policies are that your cover is only active for a fixed number of years or until you reach a certain age. You might find term policies that range from 10, 15, or 20 or more years or when you reach a maximum age – or whichever comes first. By comparison, other types of life insurance policies do not have a set term, which means they do not expire and you will remain covered and need to keep paying premiums until you cancel or make a claim.

Different types of life insurance also vary by the amount of cover you can take out and how long it takes to set up your policy or the approval process. This can be as simple as answering a few questions over the phone (such as for Real Term Life Cover) or going through a much stricter process which involves a medical or blood test.

Read more about the differences between different types of life insurance.

Why consider term life insurance?

Term life insurance can be useful if you only need cover for a certain period in your life, such as your later working years as you approach retirement, or when you’ve just taken on a mortgage and need to make sure that you’re covered during the repayment period.

Another benefit of term life insurance is how easy it can be to apply. Some term policies, such as Real Term Life Cover, only require you to answer a few questions over the phone. There are no blood tests or medicals needed, so it’s quick and simple to set up.

As well as this, at the expiration of your Real Term Life Cover policy (once you have held your policy for 20 years, or you have reached the age of 85, whichever comes first), you can opt to continue to hold cover with a Final Expenses Benefit (equal to 20% of your current cover amount) for 10 more years at no additional cost or at any time during the 10 year period, you can choose to end your policy and receive a guaranteed payout of half of the Final Expenses Benefit.

Couples

The next 20 years are likely to be your most unpredictable ones as you settle in with your partner and make plans to build up your wealth. Term life insurance can help keep your household plans on track in case you passed away or suffered a terminal illness during this time. You may also consider term life insurance to top-up any existing cover that you may have, particularly to reflect any additional needs of your partner.

Young Families

Put a safety net in place for your family, especially during your children’s important early years. A 20-year term life insurance policy can cover you for most of your mortgage repayment period.  You may also consider term life insurance to top-up any existing cover that you have, particularly to reflect any additional needs of your partner.

Established Families

Term life insurance can also help make sure your family’s evolving needs are taken care of, and they won’t be impacted by costs such as your funeral if you pass away.

Seniors

You’ve worked hard for decades and deserve to live without financial worries. A term life policy can cover you during your early retirement years, when you no longer have an income to rely on, helping your family cover funeral costs or relocation/downsizing if you passed away during that time. Or, in case you became terminally ill, you can use the money to pay for palliative care.

Plus, with a policy such as Real Term Life Cover, you have peace of mind with a guaranteed cash payout once your life cover expires!1

See how easy it is to apply for cover

Can I buy term life insurance online?

Generally, the first step to buying term life insurance online is to request a quote from a trusted provider. With Real Term Life Cover, all you need to do is answer some simple health questions over the phone.

What is Real Term Life Cover?

Real Term Life Cover is a type of fixed term insurance policy that expires after 20 years or when you turn 85 (whichever comes first). This can be a great way to make sure you and your loved ones are financially protected and could continue their current lifestyle should you pass away or suffer a terminal illness (after holding your policy for 12 months).

Request a quote for Real Term Life Cover.

How much Real Term Life Cover should I get?

With Real Term Life Cover, you can tailor the Benefit Amount to suit your needs. The minimum benefit is $10,000, and you can select your chosen benefit in increments of $5,000, up to the maximum of $100,000.

Is my Real Term Life Cover payout taxable?

It’s always best to seek the assistance of a tax expert for advice, however usually any personal life insurance benefits that you or your family receive aren’t counted as taxable income, and therefore will not be taxed. This means that any money you or your loved ones receive can be put towards your expenses or bills if you were to pass away or suffer a terminal illness.

Are my Real Term Life Cover premiums tax deductible?

Generally, life insurance premiums are not tax deductible. However, you should be aware that this may change, and may not apply to your individual circumstances. Therefore, we recommend you seek qualified professional advice to fully understand any tax implications.

Can I get money from my Real Term Life Cover policy?

Real Term Life Cover pays a Benefit Amount to your beneficiaries if you pass away or suffer a terminal illness during the cover period (terminal illness is subject to a 12-month waiting period). Your policy doesn’t have a cash value and cannot be redeemed for cash.

However, Real Term Life Cover comes with a guaranteed cash payout when your cover expires and the Life Insurance Benefit ends. This means:

  • Your protection continues for another 10 years with our Final Expenses Benefit. This benefit is equal to 20% of your Life Insurance Benefit and is at no additional cost to you
  • After this time (or if you pass away during this time) you or your family will receive your Final Expenses Benefit in full
  • Or for greater flexibility, at any time during this 10-year period, you can choose to cash out half of the Final Expenses Benefit and end your Policy

Note: If your cover ends prior to the expiry of your Life Insurance Benefit, you will not be eligible for the Final Expenses Benefit or the guaranteed cash payout.

How do I make a Real Term Life Cover claim?

With Real Insurance, you get your own Australia-based personal claims specialist, who will help if you or your family ever need to make a claim. All you need to do is follow the steps on the claims page to get started. You will usually be required to provide us with documentation, which will depend on the type of claim you are making, and your circumstances. Your claims specialist will guide you through this process.

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1. If your cover ends prior to the expiry of your Life Insurance Benefit, you will not be eligible for the Final Expenses Benefit or the guaranteed cash payout.