Life insurers need to explain double-digit premium increases

Mike Taylor

Managing Editor and Publisher

16 January 2026

Australian life insurance consumers have been the subject of repeated double digit increases in their premiums and life insurers should explain why, according the Financial Advice Association of Australia (FAAA).

In a response to the current independent review of the Life Code, the FAAA pointed to significant premium increases as a key issue along with the confusion which can be caused by insurers offering upfront premium discounting.

The review, being chair by former Australian Securities and Investments Commission (ASIC) deputy chair, Peter Kell, has been told by the FAAA that, “over recent years, life insurance consumers in Australia have been subject to very significant premium increases on their life insurance policies”.

“This has involved repeated double digit increases, which in many cases will mean that they are paying nearly double what they were paying just a few years ago,” the FAAA submission said.

“Life insurance is already a product where age factors result in regular premium increases. On top of this, large pricing increases can have a substantial impact on the budgets of Australians. Such large premium increases can put pressure on clients, particularly if they have other financial challenges at that time,” it said.

The FAAA said that premium sustainability is critically important given the number of factors that would influence future premium increases.

“We would like to see improved communication to clients of what they can expect in terms of future premium increases over the medium term. We would also like some means of the adherence by the life insurer to those projections or accuracy of those projections to be assessed,” it said.

“The ability to increase premiums is the major lever available to life insurers. It should be used very carefully and in a manner that involves a high level of transparency. Achieving greater premium sustainability is a key demand of life insurance clients and should be a priority of the life insurers.”

On the issue of upfront premium discounting by insurers, the FAAA submission noted that, in recent years it has become common for life insurers to offer material upfront short-term premium discounts for new clients.

“The consequences of this are that it is often in the interests of clients to seek new cover on a regular basis to access these discounts, provided that their health has not deteriorated in the meantime.

“It is our view that this is a very problematic practice, which can work to the disadvantage of existing clients who remain in their existing policies. Whilst the Code does not currently address pricing issues, this might be an area that the review could consider,” it said.