Yeah, they actually do. Between 92-97% of Australian life insurance claims get paid (varies by insurer). The average payout time is 1.3 months, and billions of dollars are paid to Australian families annually.

The small percentage of claims that aren’t paid are generally due to things like not disclosing information when applying, the claim not meeting the policy definition, or the condition not being covered under the policy.

The process:

Submit your claim with medical evidence.

The insurer assesses it (this can take time).

They may request more information or an independent medical exam.

They make a decision.

Typical timeframes:

Income protection: 1–3 months

TPD: 6–12 months

Life insurance: 1–3 months

Trauma: 1–6 months

Why some claims aren’t approved:

Non-disclosure (leaving out information when applying)

The condition isn’t listed in the policy

The claim doesn’t meet the policy definition

Fraudulent claims

Bottom line: Being accurate and complete in your application and understanding your policy terms can improve the likelihood of a claim being successful. The stats show most claims are approved.

Source: APRA/ASIC Claims Statistics 2024. Industry average, individual circumstances may vary.

This isn’t about taking out the biggest policy possible — it’s about understanding how people often estimate the amount of cover they might consider.

A common approach is to:

Add up expenses such as mortgage, debts, schooling costs, and ongoing living expenses.

Subtract any lump sums already available, like superannuation payouts, savings, or existing insurance benefits.

The gap is an indication of the amount of cover some people choose.

Example: If total expenses come to $800,000 and super would provide $200,000, the shortfall would be $600,000.

Industry guidelines often suggest between 5–10 times annual income as a starting point for consideration. This is a general rule of thumb only — people’s situations vary, so reviewing your cover regularly is a good idea.

It can be more affordable than you might expect.

Basic life insurance premiums for people in their 30s often fall in the range of about $40–$80 per month, depending on factors like age, health, smoking status, and policy type.

Example premium ranges:

30-year-old woman, $500k cover: Around $30/month*

35-year-old man, $500k cover: Around $50/month*

Through super: Sometimes as low as $10–$20/month*

*These are indicative examples only and will vary based on individual circumstances and insurer pricing.

Not having insurance can result in significant financial impacts if an insurable event occurs — many people see cover as a way to manage that risk.

Non-disclosure can affect claims.

If an insurer finds that information provided in an application wasn’t accurate or complete, they may reduce or decline a claim — even if the detail seems unrelated to the event being claimed for.

What can happen:

The insurer investigates the claim.

They discover information that wasn’t disclosed.

They may adjust or cancel the policy, which could affect whether a benefit is paid.

Examples of information sometimes missed on applications:

Smoking habits (including occasional smoking)

Past sports injuries

Previous medical or counselling sessions

Key takeaway: Being accurate and complete when applying can reduce the risk of issues at claim time.

Short answer: Life insurance is generally designed for situations where others rely on your income or you have significant debts.

If there’s no financial dependency on you and no major debts, some people choose to focus on other types of cover. For example:

Income Protection – may provide ongoing payments if you meet the policy definition of being unable to work due to illness or injury.

Total and Permanent Disability (TPD) – may provide a lump sum if you meet the policy definition of being totally and permanently disabled.

These types of cover are often considered for protecting your own income and lifestyle while you’re alive, whereas life insurance is generally intended to support others financially if you pass away.

Through super:

Can be lower cost than standalone cover.

Often automatic for basic levels of cover, with no medical checks required.

Premiums are deducted from your super balance instead of your take-home pay.

Standalone policies:

May offer a wider range of cover options and features.

You have direct control over the policy, and it isn’t tied to a super fund.

Premiums may be tax-deductible if they meet ATO criteria.

General note: Some people use cover through super as a base and add standalone cover for additional protection. The best approach depends on individual circumstances, so it’s worth understanding the differences before deciding.

Good news: Many people already have some basic insurance cover through superannuation or work. Not-so-good news: Default cover levels are often limited.

What’s commonly included through super:

Basic life insurance (often 1–2× annual salary)

Total and Permanent Disability (TPD) cover (often same amount as life cover)

Sometimes basic income protection

What’s commonly included through work:

Group life insurance (often 1–3× annual salary)

Sometimes income protection or salary continuance

May include travel insurance or accident cover

Why default cover may be limited:

Lower cover amounts: Many default super policies provide 1–2× salary. For example, if the annual salary is $80k, that’s $80k–$160k in cover. For some people, this may not be enough to cover larger debts or expenses.

Less control: Super funds can change or cancel cover. Changing jobs can also mean losing work-based insurance.

Stricter definitions: Group policies often have narrower claim definitions, particularly for TPD and income protection.

If you want to understand your position, you could:

Log into your super account and check your insurance statement.

Ask your employer or HR team about any work insurance.

Compare the features of your existing cover to other options in the market.

Some people choose to keep super-based insurance for its cost-effectiveness and add personal cover to increase protection. Others make adjustments after reviewing their needs and options.

Bottom line: Default cover can be a helpful starting point, but it’s worth understanding what you have and how it compares to your overall financial commitments.

Pre-existing health conditions don’t always stop you from getting cover.

In general:

Milder conditions (like managed high blood pressure) may still be covered, sometimes with higher premiums.

More significant conditions may lead to exclusions or increased premiums.

Severe conditions may not be covered under certain types of insurance, though other cover types could still be available.

Why disclosure matters: Being accurate and complete on your application helps avoid complications later. If an insurer finds information wasn’t disclosed, they may reduce or decline a claim, or cancel the policy in line with the policy terms.

Medical requirements vary based on the level of cover and your circumstances:

For smaller amounts of cover (e.g., under $500,000) and applicants in good health, insurers often only require health questions.

Higher cover amounts or older applicants may be asked to complete a medical exam.

Large cover amounts (e.g., $1M+) may involve a medical exam and additional tests.

What a medical exam can involve:

Measuring height, weight, and blood pressure

Blood and urine tests

General questions about your health history

Usually takes around 30 minutes and can often be done at your home or workplace

Note: Attempting to influence test results can delay the process. Insurers may request a repeat test if results appear inconsistent.

Tax treatment depends on how the cover is held:

Outside super: Income protection premiums are generally tax-deductible.

Through super: Premiums are paid from your super balance and are not usually personally tax-deductible.

Example: If premiums are $100/month, the annual deduction could be around $1,200 depending on timing, structure, and your marginal tax rate. The actual tax benefit will vary by individual circumstances.

Important to note: Any benefit payments from income protection are generally treated as taxable income. The tax payable will depend on your income and tax bracket at the time.

Income protection is designed to provide regular payments if you meet the policy’s definition of being unable to work due to illness or injury.

Payment levels and periods vary, but policies often include:

Up to 90% of pre-disability income for the first 6 months (if offered by the insurer)

Up to 70% after that, for the benefit period selected in the policy

Cover for both partial and total disability as defined in the policy terms

Conditions that may be covered include:

Illnesses or injuries that prevent you from working

Mental health conditions such as depression or anxiety (depending on the policy)

Both work-related and non-work-related conditions (depending on policy terms)

Common exclusions can include:

Normal pregnancy (complications may be covered depending on the policy)

Self-inflicted injuries

War or terrorism

Certain high-risk activities

Always check the Product Disclosure Statement (PDS) for the specific definitions, inclusions, and exclusions that apply to a particular policy.

The waiting period is the length of time you must wait after becoming unable to work before benefit payments can begin. It’s similar in concept to an excess on car insurance, the longer the waiting period, the lower the premium tends to be.

Common waiting periods include:

30 days: Higher premiums, payments may start sooner

90 days: Often chosen for its balance between cost and timing

6 months or more: Lower premiums, but requires a longer period without benefit payments

Key point: You generally need to be unable to work for the entire waiting period. If you return to work during this time, the waiting period may restart depending on the policy terms.

Things people often consider when selecting a waiting period include existing sick leave entitlements, savings, and other available resources during time off work. Always check the Product Disclosure Statement (PDS) for the waiting period options and conditions for a particular policy.

TPD vs Trauma Insurance – What’s the difference?

Total and Permanent Disability (TPD) insurance:

Pays a lump sum if you meet the policy definition of being totally and permanently disabled.

Assessed based on your ability to work — this may be in your usual occupation or in any occupation, depending on the policy terms.

Examples of conditions that may be covered (depending on the policy): loss of a limb, severe back injury, or certain mental health conditions that prevent work.

Trauma insurance:

Pays a lump sum if you are diagnosed with a specific serious medical condition listed in the policy.

Assessed based on the medical diagnosis, not your ability to work.

Examples of conditions that may be covered (depending on the policy): cancer, heart attack, stroke.

Some people choose to hold both types of cover, as TPD focuses on ability to work while trauma insurance focuses on specified medical diagnoses. Always check the Product Disclosure Statement (PDS) for the specific definitions, inclusions, and exclusions that apply.

The basic definition: TPD (Total and Permanent Disability) cover pays a lump sum if you meet the policy definition of being unable to work again due to illness or injury.

Two common definitions in policies:

Own occupation: Unable to return to your specific job. This definition often has higher premiums.

Any occupation: Unable to work in any role you are suited for by education, training, or experience. This definition often has lower premiums but can be harder to meet.

Typical timing considerations:

Many policies require a 3–6 month waiting period before a claim can be lodged.

Medical evidence must confirm the condition is permanent.

Some conditions (such as certain mental health conditions) may have additional waiting periods.

Processing time: TPD claims can often take 6–12 months to assess. Some people consider other cover types, such as income protection, to provide financial support during this period. Always check the Product Disclosure Statement (PDS) for exact definitions, requirements, and timeframes.

Common reasons for successful TPD (Total and Permanent Disability) claims include:

Cancer and complications from treatment

Certain mental health conditions (e.g., depression, anxiety, PTSD)

Heart attacks and cardiovascular disease

Significant back and spine injuries

Loss of limbs or mobility

Key point: TPD eligibility is generally based on how a condition impacts your ability to work, as defined in the policy.

Illustrative examples:

Mild depression that is well-managed may not meet a TPD definition.

Severe depression that prevents daily functioning may meet a TPD definition.

Back pain that is manageable may not meet a TPD definition.

A spinal injury that severely limits mobility may meet a TPD definition.

Always check the Product Disclosure Statement (PDS) for the exact definitions and assessment criteria that apply to a specific policy.