Permanent life insurance is back in the spotlight as Australians look for ways to lock in financial protection for their families amid changing economic conditions. While term life insurance remains the default for most, 2025 is seeing renewed interest in whole-of-life and universal life policies, especially as superannuation reforms and cost-of-living pressures shift the risk landscape. Let’s unpack what permanent life insurance really offers, how the products are evolving this year, and who stands to benefit most.
What Is Permanent Life Insurance and How Does It Work?
Permanent life insurance provides lifelong cover as long as you pay your premiums. Unlike term life insurance, which expires after a set period (usually 10, 20, or 30 years), permanent policies guarantee a payout to your beneficiaries no matter when you die. The two main types in Australia are:
- Whole life insurance: Offers guaranteed death benefits and typically builds cash value over time. Premiums are usually fixed.
- Universal life insurance: Offers more flexible premiums and death benefits, and also accrues cash value that can be accessed or borrowed against.
Historically, these products have been less popular in Australia compared to the US, but recent years have seen a niche market emerge—particularly among high-net-worth families and business owners. In 2025, insurers are updating their offerings to include more transparent fees, digital management, and integration with estate planning tools.
Permanent Life Insurance in 2025: Policy Updates and Market Trends
This year, several factors are reshaping the permanent life insurance landscape:
- Regulatory reforms: ASIC’s 2024-25 insurance review has pushed providers to clearly disclose ongoing fees and potential returns on cash value components. Expect simpler product documents and improved digital access for policyholders.
- Superannuation changes: With stricter early release rules for super, some Australians are turning to permanent life insurance as an alternative wealth transfer tool. The ability to accumulate cash value inside a policy can be attractive for legacy planning—especially as the $3 million super cap bites for some families.
- Premium trends: While premiums for permanent cover remain higher than term, some insurers are introducing hybrid products with partially guaranteed elements to keep costs manageable. In 2025, average annual premiums for whole-of-life policies range from $3,000–$6,500 for a healthy, non-smoking 40-year-old, but can be higher for older applicants or larger sums insured.
Some new entrants—especially digital-first insurers—are offering simplified underwriting for policies up to $500,000, speeding up approvals and making lifelong cover more accessible.
Who Should Consider Permanent Life Insurance?
Permanent life insurance isn’t for everyone. Here’s who might benefit most in 2025:
- High-net-worth individuals who want to lock in a tax-effective inheritance for their heirs, or cover potential estate tax liabilities (especially relevant for large property or business holdings).
- Parents of children with disabilities who need to guarantee long-term care funding, regardless of when they pass away.
- Small business owners looking for succession planning tools, such as key person insurance or buy-sell agreements funded by permanent policies.
However, for most Australians—especially those focused on affordability—term life still offers a better balance of cost and cover. The main drawbacks of permanent life insurance remain its higher premiums and complexity. Surrendering a policy early can also mean losing significant value, especially in the first 10–15 years.
Making the Most of Permanent Life Insurance in 2025
If you’re considering permanent life insurance, keep these tips in mind:
- Compare fees and returns: Look closely at the policy’s cash value growth projections and all ongoing costs. ASIC’s Moneysmart tool now includes updated calculators for permanent life insurance as of 2025.
- Understand the tax treatment: Death benefits are generally tax-free, but accessing the cash value during your lifetime can have tax implications.
- Review annually: As with any long-term financial product, review your cover regularly—especially after major life events or regulatory changes.
Conclusion: Is Permanent Life Insurance Right for You?
Permanent life insurance can be a powerful tool for lifelong financial security, legacy planning, and wealth transfer. The 2025 market is more transparent and flexible than ever, but the decision comes down to your financial goals, family needs, and willingness to pay higher premiums for lifelong certainty. For most, it’s a specialist product—but for those with complex estates or care needs, it can be the missing piece of the puzzle.
