Personal insurance can be very expensive. For some professions, especially where the insured person isn't in his 20s with perfect health, premiums can run to many hundreds of dollars a month for some types of cover.

Most insurance offered is called "retail insurance", this is the ordinary type of life policy you get from an insurance agent. The commissions on this product are excellent, often over 100% of your first year's premium.

Sometimes the agent can offer a cut premium by rebating some of this commission, but this is not always the case.

There is another type of insurance available, it is called "Group Rate" insurance, but if this confuses you you could probably get away with substituting the word "Wholesale" to get some idea of what it is.

You can get group rate insurance through many super funds and some unions probably offer it as well. The commission paid on group rate cover is terrible (0 - 30% on average), and often even this is rebatable, however the savings are usually more than adequately passed on to members.

Of course group rate policies lack some of the bells and whistles of retail policies, if you are really keen on the optional extras you'll have to pay for a retail policy. Sometimes the options on the retail policies can be worthwhile but for many people simple life cover to extinguish the mortgage is all they require, and group rate cover usually is fine for that purpose.

 If you want a lifetime benefit, probably the most economical way to get that would be a lifetime benefit retail income protection policy with a two year waiting period and a two year cheap group rate policy. The premium for both in most cases will be cheaper than a short wait period on a single retail policy, this can be a very cost effective way of getting insurance.

The same thing goes with life and total permanent disability cover, the cheapest rate is usually available through a super fund.

Trauma cover is a little harder to get group rates on, for a start you can't get trauma cover through a super fund which makes the search a bit difficult, but some master trusts offer cheap(ish) trauma cover. Generally, trauma cover is not available at such bargain prices.

A typical strategy I use would be group rate life, TPD and income protection cover through a super fund, and a stand-alone retail trauma policy.

As I've said before, I am not a huge fan of insurance, it is basically a waste of money. You do absolutely need it though, if the consequences of not having cover are too horrible to think about.

I have never been a fan of spending fortunes on excessive amounts of insurance cover, I always recommend the extra money go toward investments or mortgage payments instead. Group rate cover is an ideal way to get the cover you absolutely need without paying too much for it.

The only "catch" with group rate cover is that you must invest money with that super fund. Sometimes when I get a client to sign up for group rate cover I tell them to think about the super fund as a kind of debit card, you pay the minimum invest and then the premiums bring down the balance so after a couple of years you have to pay a bit more. Of course if the earnings on the investment are greater than the insurance premiums you'll have income protection and life cover for the rest of your days, but usually the minimum invest of a few thousand dollars won't lead to sufficient investment earnings to necessarily pay off the insurance indefinitely.

The times when group rate cover is not the best way to go are when you require a longer benefit payment period. Retail income protection policies often pay till you reach 65 or even a lifetime benefit, but you'll be hard-pressed to find a group rate policy paying more than 5 years. In fact you'll be hard pressed even finding a group rate IP policy that pays for five years, but I assure you such products do exist.

As a side note, I will take a swipe at some ripoff policies that are going around. My clients have shown me application forms, and just yesterday my wife received a form for accidental death cover from her credit card company. First of all, this is not life insurance as such, it only covers for accidents and not sickness. Secondly the premium was a total ripoff. Although the letter was written by some marketer and went something along the lines of "congratulations, as a valued customer we are able to offer you this very special low rate on an accidental death policy", the premium when I compared it to what I could offer was terrible, it was some three times as expensive as a retail insurance policy that covers sickness as well as accidents, or about 4 to 7 times as expensive as a group rate policy.

I have never seen a good premium on an unsolicited insurance offer by a finance company, the premiums offered by banks and credit card institutions are so high I was almost tempted to write this article up in the ripoffs section. I have also seen so-called "trauma" policies offered that had dreadful terms, it covered hardly anything of any value and specifically exempted the most common trauma events that make up 80% of claims, like cancer, stroke and heart attack. The premium was slightly lower than what I could offer on a retail trauma policy, but the one I had was a comprehensive policy that covered a long list of events, I doubt anyone ever makes a claim on this other policy.

Don't ever consider signing up for a policy offered to you through unsolicited mail from any credit card company without first consulting a proper life agent or financial planner, in all likelihood the policy offered by the life agent will be cheaper but almost certainly it will be better. I am no fan of spending big money on insurance, but I am even less a fan of spending big money on totally crap insurance.

There is also a package being widely advertised on TV at the moment for policies covering the cost of a funeral. These policies are being sold with a pitch on how hard it would be for your loved ones to have to pay for a funeral. This is really just an ordinary life insurance policy, though it only covers accidental death for the first 12 months. If what they say about underwriting is true, that they won't turn down any application, I would recommend this policy only to otherwise uninsurable types that have or have had a terminal disease, otherwise I would urge you to avoid this policy, because the rates are hideously expensive compared to regular retail insurance policies, and an order of magnitude more expensive again than group rate policies.