Life Insurance Premium Increases in Australia 2026: Variable Premium Labels, APRA Review, and How an Insurance Broker Can Help

Life insurance premiums in Australia have been rising sharply, and many policyholders have been caught off guard by increases they did not expect. If you hold a policy marketed as a "level premium," you may have discovered that your premiums are anything but level. Understanding why this is happening, what regulators are doing about it, and how an experienced insurance broker can protect you is essential reading for every Australian with life cover in 2026.

Understanding Life Insurance Premium Increases in Australia

Life insurance in Australia is typically sold with two premium structures: stepped premiums, which increase each year as you age, and level premiums, which were historically marketed as remaining stable over time. The problem is that many insurers included broad unilateral variation clauses in their policy documents, allowing them to increase premiums even on "level" policies when their claims experience or other factors changed.

Between 2020 and 2025, many Australians holding individual life insurance policies — including life cover, total and permanent disability (TPD), trauma, and income protection — experienced repeated, large, and unexpected premium increases. The average annual premium rose significantly over this period due to a combination of cover indexation, age-based adjustments, and base premium rate increases applied by insurers.

As of December 2024, Australians were spending approximately $9.4 billion annually on individual life insurance obtained through financial advisers. The scale of the market means that even small percentage increases translate into significant out-of-pocket costs for households.

The APRA and ASIC Joint Review: What Regulators Found

In response to widespread consumer complaints, the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) launched a joint review of life insurance premium practices beginning in late 2022. The review examined whether premium increases were applied in accordance with policy terms and whether they aligned with reasonable policyholder expectations.

Regulators found that some insurers had increased premiums without a clear contractual right to do so. In those cases, affected consumers were entitled to remediation, and insurers were required to update their internal systems and processes. APRA and ASIC communicated their expectations to the industry in December 2023 and have continued to supervise individual life companies to ensure further improvement.

As of June 2025, APRA and ASIC noted that while the industry had made progress, the actions taken to address premium volatility through product design were still in the early stages. Regulators stated it was too early to fully assess whether these interventions would reduce the frequency and magnitude of future premium increases.

New Premium Labels: What "Variable Premium" and "Variable Age-Stepped Premium" Mean

One of the most significant outcomes of the regulatory review is a change to how life insurance premiums are labelled and marketed. The Council of Australian Life Insurers (CALI) developed new premium labels that are now being adopted across the industry.

• Variable premium — replaces the old "level premium" label. This label makes clear that the premium amount can change over time, even if it is not automatically stepped up each year based on age.
• Variable age-stepped premium — replaces the old "stepped premium" label. This label clarifies that the premium increases each year as the policyholder ages, and may also vary for other reasons.

These changes are designed to reduce the risk that consumers will misunderstand their policy terms. However, the transition is ongoing, and many existing policies still carry the old labels. If you hold a policy with "level premium" in its documentation, it is worth reviewing the fine print — or asking your insurance broker to review it on your behalf.

Key Considerations When Reviewing Your Life Insurance Cover

Given the regulatory changes and ongoing premium volatility, there are several important factors to consider when reviewing your life insurance arrangements in 2026.

• Check your unilateral variation clause — Review whether your insurer has the contractual right to increase your premiums and under what circumstances. Insurers have been required to revise these clauses to reduce the risk of them being deemed unfair under Australian Consumer Law.
• Understand your indexation settings — Many policies automatically increase your sum insured each year in line with CPI or a fixed percentage. This indexation also increases your premium. You may be able to opt out of indexation if your cover needs have not changed.
• Compare the total cost of ownership — A variable (formerly "level") premium may appear cheaper in the short term but can become significantly more expensive over a 10 to 20-year period if the insurer exercises its right to re-rate. A specialist broker can model the long-term cost of different premium structures for your specific age and health profile.
• Review your income protection benefit period and waiting period — These settings have a major impact on your premium. Adjusting your waiting period from 30 days to 90 days, for example, can substantially reduce your premium without eliminating your core protection.
• Consider whether your cover is inside or outside superannuation — Life insurance held inside superannuation is paid from pre-tax contributions, which can make it more affordable. However, cover inside super may have limitations on benefit definitions, particularly for TPD and income protection.

Common Mistakes Australians Make With Life Insurance

Many Australians set and forget their life insurance, which can lead to significant gaps in protection or unnecessary premium costs. The following mistakes are among the most common.

• Assuming "level" means fixed — As the regulatory review confirmed, many policyholders were misled by the "level premium" label. Never assume your premium is fixed without reading the policy terms carefully.
• Not reviewing cover after major life events — Marriage, divorce, the birth of a child, a significant pay rise, or taking on a large mortgage all change your insurance needs. Failing to update your cover can leave you underinsured or paying for cover you no longer need.
• Relying solely on default super cover — Group life insurance inside superannuation is a valuable starting point, but default cover is often insufficient for people with dependants, mortgages, or high income replacement needs. It also typically ceases if your account becomes inactive.
• Choosing the cheapest policy without comparing definitions — The definition of "total and permanent disability" or "income protection" varies significantly between insurers. A cheaper policy may have a narrower definition that makes it harder to claim.
• Not disclosing pre-existing conditions accurately — Failure to disclose relevant health information at the time of application can result in a claim being denied. An insurance broker can help you navigate the disclosure process correctly.

Australian Regulatory Context: APRA, ASIC, and AFCA

Life insurance in Australia is regulated by both APRA and ASIC. APRA is responsible for the prudential supervision of life insurers, ensuring they hold sufficient capital to meet their obligations to policyholders. ASIC is responsible for market conduct, including how products are marketed, disclosed, and sold.

The Australian Financial Complaints Authority (AFCA) provides an independent dispute resolution service for consumers who have a complaint about a life insurance product or claim. If your insurer has denied a claim or applied a premium increase you believe is not in accordance with your policy terms, you can lodge a complaint with AFCA at no cost.

Insurance brokers who provide personal advice on life insurance products must hold an Australian Financial Services Licence (AFSL) or operate as an authorised representative of a licensee. They are subject to ASIC's best interests duty and must act in your best interests when recommending a product.

The Life Insurance Code of Practice, administered by the Financial Services Council (FSC), sets minimum standards for how life insurers must treat policyholders, including in relation to claims handling, premium increases, and communication. The Code was reviewed in 2026 with a focus on mental health claims and premium transparency.

Questions to Ask Your Insurance Broker About Life Insurance Premiums

When meeting with an insurance broker to review your life insurance, consider asking the following questions to ensure you fully understand your cover and its costs.

1. Is my current premium structure a variable premium or a variable age-stepped premium, and what does that mean for my future costs?
2. Does my insurer have the right to increase my base premium rate, and under what circumstances have they done so in the past?
3. What is the long-term cost projection for my current policy compared with alternative products on the market?
4. Am I over-insured or under-insured given my current financial situation, debts, and dependants?
5. Are there any policy features I am paying for that I am unlikely to use, and can these be removed to reduce my premium?
6. If I have been affected by a premium increase that I believe was not in accordance with my policy terms, what remediation options are available to me?
7. How does my income protection policy define "total disability," and does it use an own-occupation or any-occupation definition?

How MyMoney® Can Help You Find the Right Insurance Broker

Navigating life insurance premium increases, new product labels, and regulatory changes is complex. An experienced insurance broker can review your existing cover, compare it against the current market, and recommend adjustments that protect you without paying more than necessary.

MyMoney® connects Australians with qualified, licensed insurance brokers who specialise in life, income protection, TPD, and trauma cover. Whether you are reviewing an existing policy, concerned about a recent premium increase, or starting from scratch, our marketplace makes it easy to find a professional who can help.

Post a Brief to describe your insurance needs and receive proposals from experienced insurance brokers. Or Browse Insurance Brokers on the MyMoney® Marketplace to find a specialist in your area today.