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Planning • 4 min read

How does Life Insurance work?

Find out how Life Insurance works, check what’s covered and figure out how to renew and make a claim.

If you’re looking for ways to help protect your loved ones, it’s worth considering Life Insurance. If you’ve ever wondered how Life Insurance works, here’s some useful information.

By finding Life Insurance cover that suits your circumstances, you’ll be investing in greater financial security and peace of mind for yourself and your loved ones. 

What does Life Insurance cover?

Life Insurance will pay out a lump sum to your dependents in case of your death. All causes of death are covered, except suicide or death caused by self-harm within the first 13 months of your cover. 

What doesn't Life Insurance cover?

Life Insurance policies have inclusions and exclusions that you should check before purchase. Suicide and death from self-harm are not covered within the 13 months of your Insuranceline policy; if anything else is not covered (for example, based on dangerous hobbies or pastimes you participate in), we will let you know before your cover starts. 

Life Insurance terms explained

Life Insurance can seem confusing since there are several terms you might not be familiar with. Here’s a brief explainer of terms you may come across:

  • Premiums—this is the money you pay on a monthly or annual basis to keep your up-to-date insurance cover. Premiums can vary depending on your level of cover and age.
  • Additional cover—depending on your preference, you can opt for additional cover like Cancer Cover or Major Illness Cover when you purchase Life Insurance. These types of cover will make sure your loved ones receive a lump sum in a wider range of circumstances. 
  • Beneficiary—this is the person (or the people) who will be receiving the lump sum from your Life Insurance. This is up to you, and may be your spouse or your dependent children. 

Life Insurance helps protect your family when they need it most—it can be as easy as picking up the phone or applying online.

When you apply for Life Insurance, you may be asked questions about your age, occupation health and lifestyle. It’s important to answer these questions accurately; otherwise, your claim may not be paid.

Some Life Insurance providers may request you have a medical check before giving you life cover, and the results of this may affect the cost of your Life Insurance premiums, or whether you can get cover at all.

Some Life Insurance providers offer exclusions e.g. in the case of a dangerous occupation, rather than making cover more expensive or declining cover.

How Life Insurance renewals work

As long as you keep paying your Life Insurance premiums, your insurance will provide cover until you reach a specified age. And the younger and healthier you are when you take out Life Insurance, the cheaper it is likely to be. Generally, you won’t be asked for a medical check later down the track to keep your Life Insurance going.

How making a Life Insurance claim works

If you were to pass away, a family member would need to contact your insurance provider to make a claim on your Life Insurance policy. So, it’s a good idea to give someone in your family access to your insurance policy information.

Your Life Insurance provider will advise what information your family needs to supply to support the Life Insurance claim e.g. access to medical records and death certificates. If the claim meets the conditions of your Life Insurance policy, your family could receive an advance payment of up to $10,000 to help pay any legal expenses.

After the claim has been approved, your family, estate, or beneficiaries will receive the full amount of the Life Insurance benefit payable on your policy and the payout will generally be tax-free. When you set up your Life Insurance policy, you can usually choose the amount of cover you need. For example, with Insuranceline you can choose an insurance payout between $100,000 and $1.5 million.

Is Life Insurance a good investment?

If you have financial dependents, then Life Insurance may provide valuable peace of mind, allowing you to continue your life in the knowledge that your loved ones will be taken care of when you’re gone. 

If you would like to explore your Life Insurance options through Insuranceline, you can get a quick quote online or call 13 77 87 and one of our friendly staff can assist you.


Backed by TAL

^Insuranceline Win 1 of 5 $1000 Visa Cards (Competition). Subject to the Terms and Conditions, the Promotor is offering customers a chance to win one of five Digital Visa Gift Cards valued at $1,000, in one of the four draws. Entry commences on the 1st of April 2024 and will run for four months until 11:59pm AEST on the 31st of July 2024 (Entry Period). During the Entry Period, to be eligible to participate in the Competition, customers must get a quote and take out a new Insuranceline Life Insurance, Income Protection Insurance, or Funeral Insurance policy to enter the Competition. A maximum of one (1) entry into the Competition will be awarded per eligible policy. The Promotion is not open to existing customers, or customers who have cancelled a Promoter branded policy in the 12 months prior to the commencement of the Entry Period and then taken out a new Insuranceline branded policy. Each of the four Prize Draws will take place at Level 16, 1 Denison Street, North Sydney NSW 2060 on the respective Prize Draw and Time, as listed in the table in Condition 13 (and if any Redraws if there are any unclaimed prizes, Condition 19) of the full Terms and Conditions, and the winners will be sent an email and will be attempted to be notified via phone within two (2) business days of the Draw and published on Max. retail value of the total prize pool is $20,000. To be eligible at time of the draw, customers must still have an active policy and have paid 1 month of premiums in full. View eligibility criteria and full terms and conditions here. Promoter: TAL Direct Pty Limited ABN 39 084 666 017 AFSL 243260. Permits: NSW NTP/09255, ACT TP24/00483, & SA Licence No. T24/388.

**Bonus 10% more cover is calculated on the fifth anniversary from the Policy Commencement Date. Each adult life insured will have an extra 10% of the average Funeral Insurance Cover amount held during the previous five years added to their Funeral Insurance benefit. Terms and conditions apply. Refer to the PDS for more information.

#Claims paid figures relate to all Insuranceline life insurance policies in the 2021 financial reporting year (1 April2021 to 31 March 2022). All claims on Insuranceline policies are assessed against the relevant policy terms and conditions. These terms and conditions, as well an explanation of the claims process, can be found in the applicable Product Disclosure Statement. Claims are administered and settled by the insurer, TAL Life Limited.

***Insuranceline is the longest standing provider of Funeral Insurance in Australia, based on: Strategic Insight, Actuaries & Researchers. Funeral Insurance means a policy with periodic premium payments that provides a lump sum to help pay for funeral and associated expenses when you die and excludes pre-paid Funeral Plans and Funeral Bonds.

The information provided on this website is general advice only which means it does not take into account your individual needs, objectives or financial situation. For this reason, you should consider whether it is appropriate for you, and before you decide to buy or to continue to hold an insurance product, you must read the relevant Combined Product Disclosure Statement (PDS) and the Financial Services Guide (FSG). The PDS/FSG contains important information which will help you understand the product, including what's covered and what's not covered and to decide whether it is appropriate for you. The Target Market Determination (TMD) for the relevant product, where applicable, is also available.

If you are considering cancelling a policy you already hold in order to replace it with a new policy, make sure you read the terms and conditions of both policies before you make a decision. The cover terms may be different, you may lose benefits accrued under your existing policy, and waiting periods may apply to the new policy. Changes in your personal circumstances (such as your age, health, and employment) that have occurred since your existing policy was originally taken out may also affect your new policy. As your application for a new policy may not be accepted, and some policies may be unable to be reinstated after they have been cancelled, you should consider waiting until your new policy is confirmed before you cancel any existing cover.

Promoted by Insuranceline, a trading name of TAL Direct Pty Limited (of Level 16, 363 George Street, Sydney NSW 2000) ABN 39 084 666 017 AFSL 243260. TAL Life Limited ABN 70 050 109 450 AFSL 237848 issues the life insurance benefits. St Andrew's Insurance (Australia) Pty Ltd ABN 89 075 044 656 AFSL 239649 issues the Involuntary Unemployment Cover.

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