Fact Sheet
Life Insurance - Underwriting Complaints & FAQs
Life Insurance in Australia
For over 120 years the life insurance industry has provided financial security for individuals and families. Currently, about 6.3 million Australians are protected by individual life, disability and trauma policies. Life insurance provides an affordable way of collectively sharing risks that are too great for an individual to bear. In the event of one of these risk occurring without some form of insurance, individuals could suffer financial hardship, the loss of savings and the need to rely on the government's social security safety net.
In Australia, life insurance is voluntary. You may choose whether or not to purchase life insurance and how much you wish to insure against certain events occurring. Some superannuation funds provide life insurance via group life insurance while you are working and remain a member of the fund.
The Life Insurance Contract
A life insurance policy is a contract that sets out the responsibilities of the life insurance company and the person who is taking out the insurance. The consumer, known as the insured, agrees to pay premium/s and the insurance company agrees to pay out an agreed amount in the event of certain events occurring.
When you apply for life insurance, the insurer will assess the risk that you may make a claim. This process is known as underwriting and ensures that the cost of your insurance is proportional to the risk involved. It also ensures that people with the same or similar risk pay the same amount of premium. Underwriting relies on the extensive use of statistical data and actuarial estimates.
In Australia, approximately 93% of all applicants for life insurance obtain policies at standard premium prices. A further 5% are classified as having additional risk, and therefore may pay higher premiums or have some conditions excluded from their policy. The 2% who are refused cover have serious existing health impairments, extremely hazardous jobs or other high risk factors.
Frequently Asked Questions (Mental Health)