BACK to BASICS: What does insurance cost?

If you had a machine that gave you $4,000 a month, would you protect it? For many of us, that machine is you. So when talking about the cost of insurance, it is often helpful to think about how much you (and your wage) are worth over the course of your working life.

Isn’t insurance expensive?

Insurance premiums, like private health insurance, generally increase as you get older. This is because you are more likely to become sick or pass away.

Many of our clients take out a comprehensive suite of insurance (life, TPD, trauma and income protection) once they have their first full-time job.  Others wait until they decide to have their first child (they are often prompted to complete their insurance and estate planning by this new sense of responsibility!)

The younger and healthier you are when you apply for insurance, the simpler the process is. Unfortunately, many people wait until there is a problem with their health until they consider insurance.

No one is invincible. If you do have an accident, get sick or pass away, you and your family will be under a great deal of emotional stress. Insurance can provide you with financial security, so that you don’t have to worry about money on top of getting well.

Comparing the costs

Spending money is always a matter of priority; after all, a daily cup of coffee from a café can cost up to $90 a month.

Most Australians insure their car, but many do not insure themselves. Yet you may not use your car every day, but you use your body (and health) every minute of every day! The value of most cars decreases over time, whereas the amount earned by an employed person generally increases over the years. So… if you are your biggest asset, shouldn’t you be insured?

table premium

With the help of a financial planner, it is easy to compare the cost of insurance and whether you can afford it. Thousands of Australians have found that putting a protection plan in place, to minimise financial risks for them and their families, does not have to cost the earth.

How can I make insurance more affordable?

At Fortress, we can help you structure your protection plan in the most cost-effective way.  Here are some things we consider with our clients:

  • Pay some of your insurance from your super account. Flexi-linking allows you to decide how much you want to pay in cash or from your superannuation balance. This allows you to structure your protection in way that suits your budget.
  • Pay annually. There is usually a discount provided by insurance companies for paying upfront – often up to 8%.
  • Consolidate your cover. Many insurance companies offer a multi-policy discount, so if you have insurance with multiple providers, consider consolidating them.
  • Compare stepped or level premiums. Stepped premiums are usually cheaper initially, but will increase each year as you age. Level premiums cost more upfront, but are cheaper in the long run.
  • Decline CPI indexation. When policies include CPI indexation, your sum insured increases each year to keep pace with inflation (so although you took out a $500,000 life insurance policy, the next year it may increase to $512,500). This obviously also increases your premiums each year. Declining CPI means your amount insured will remain the same.
  • Pay premiums via salary sacrifice. We can help you check to see if your employer has a salary sacrifice agreement in place where payments are prospective. We will also make sure your super contributions won’t be affected.
  • Give up smoking. If you have been smoke-free for 12 months, you can often be assessed as a non-smoker. If you were a smoker when you took out insurance, but have since quit (for at least 12 months), we can help you move to non-smoking rates (which are much cheaper).
  • Lower your BMI. If you have been given a premium loading due to Body Mass Index (BMI) and you have since lost weight (and been at a lower BMI for 12 months) we can help you apply for reduced loading.

Can I make changes to my policy?

Yes. Life involves changes; people get married, buy a house, raise a family, transition to retirement.  So as your circumstances change, your policies can change with you.  As these changes happen they may impact the amount of cover you need, or the way you want to pay for the premiums.  At Fortress we meet with our clients annually to guide them as their lives change. Keep in mind, reducing cover is easy – but reinstating or increasing benefits is more difficult (it may require a new application and medical checks).

To set up or review your insurance protection plan with Fortress Financial Solutions, please call our office on 07 4646 4970, email us at or book your consultation online.

Written by Emma Linton Doig, Practice Manager at Fortress Financial Solutions.

foot note

Information on this site may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs before acting on it. Where the information relates to a particular financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product.

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