How much Life Insurance do I need?

Working out how much life insurance cover you need isn’t always easy, but taking the time to get it right can make a big difference down the track. After all, you’ve worked hard to build a future for your loved ones so your policy should work hard to protect it. Having enough cover in place will give you peace of mind knowing you or your loved ones won’t have financial worries if life takes a turn for the worst.

Keep in mind that your life insurance policy can be tailored with more than just a higher or lower benefit amount. You’ll also need to decide whether or not to include optional extras in your policy in case of a serious illness or permanent disability. This article will cover what you should consider when setting up your policy and how your level of cover can make a difference to you and your family.

The first thing to remember is that there’s no ‘one-size-fits-all’ approach for setting a cover amount. Everyone’s life is different so you’ll need to keep your lifestyle, family, financial goals and other personal factors in mind when setting a cover amount. That includes:

  • Your current and future relationship plans.
  • Your partner’s career or earning potential, including whether or not they would be eligible for government payments.
  • Any financial assets or debts you have, such as a property or a mortgage.
  • The number of financial dependents you have – whether it’s children or elderly parents.
  • Your total household income.
  • Common living expenses (also factoring in things like holidays, renovations, and a new car).
  • Your savings or other cash holdings.
  • Any other payments your family would be eligible for in the event of your death, including superannuation entitlements.

A good way to start is by adding up your weekly, monthly, or annual cost of living. Once you figure out how much it costs to live your life, working out your level of cover is a lot easier.

Did you know that many Australians are under-insured when it comes to life insurance? The median cover amount for policyholders is $143,000, which only covers around twice the median income for the average household.1

Work out how much life insurance you may need

Ready to work out how much life insurance you might need? Skip the guesswork and do it the easy way with our free Life Insurance Calculator.

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Do I need life insurance if I’m single?

If you have no dependents or mortgage to take care of, you may consider that you have minimal need for life cover. But consider what your needs will be in the event you suffer a serious illness or a permanent disability. The impacts on you and those close to you could be significant without some form of cover.

Think about what would happen if you couldn’t take care of yourself

You may want to consider adding Serious Illness or Total & Permanent Disability cover to your life insurance policy. Paying for medical bills and private care isn’t easy on a single income – even more so if you weren’t able to work at all. In this instance, your life insurance payout could help you keep living independently if you became physically restricted, such as by installing medical equipment in your home to assist with daily tasks. You can even put it towards rehabilitation or in-home assistance to potentially get your life back on track.

Getting life insurance can be even easier while you’re younger as you could be eligible for a higher benefit amount. Plus with Real Insurance, once accepted, as long as you pay your premiums on time, we guarantee to renew your cover despite changes to your age, health and lifestyle.

Request a quote today to see how much cover you can get.

Do I need life insurance for my partner or family?

It’s not easy to think about dying or the effect it could have on your loved ones but staying prepared means you need to plan for all possibilities.

On top of the emotional stress of losing a parent or life partner, your family could be left with financial troubles if your total household income was suddenly halved. It’s no wonder 80% of people said they were worried about protecting their family in our Family Protection survey.

With Real Life Insurance you can include your partner on a joint life insurance policy. This would provide your loved ones with a cash payout if either you or your partner passed away. This could help with paying for your children’s education, the mortgage, and other ongoing living costs. Even if the main provider was still around, losing a spouse means they’ll need to take on more responsibilities at home while balancing an income. Life insurance could give your surviving partner one less thing to worry about while they focus on raising a family, so it might be worth looking into joint cover.

Some policies also come with optional Children’s Insurance. This pays up to $50,000 if your child suffers a defined injury or illness to help you take care of them. If you’re worried about the added financial stress of medical bills and treatment, consider looking into how Children’s Insurance can make a difference.

How much cover is needed if you’re an established family

Your lifestyle might change as you and your children get older but the need for financial security stays the same. As your children approach their teens or early adult years, it’s common for them to have aspirations you need to provide for. Whether it’s supporting their dream of becoming a sports star or studying at university, the financial commitments can start to pile up for established families.

Many growing families tend to move (or plan to move) into a bigger living spaces. That means you’re likely have a higher mortgage at this stage in life, so it’s important to factor this into your life insurance cover amount. This is perhaps when a joint policy can be most useful as it can provide extra security in case either you or your partner were no longer around to work.

Read more on how life insurance can help established families.

Protecting your financial future as a senior

After decades of hard work, life may reward you with time to yourself as you get older. Your later years are the perfect time to unwind, relax and enjoy your time out of the workforce – you’ve earned it! At this stage in your life, you are likely to have significantly paid down your debts and you may have fewer financial dependents. However, it’s still important to assess your needs and confirm that you have sufficient funds to cover you and your family if the worst were to happen. Life insurance is something you could consider as a means of filling the gaps in any plans, particularly if you’ve retired early and are not yet eligible for the pension and other benefits.

Talking with your loved ones about their future endeavours is a great way to work out how much cover you might need in case you passed away or suffered a terminal illness. Find out more about life insurance for seniors.

How much life insurance do I need?

When it comes to life insurance cover, don’t settle!

It’s easy to fall into the habit of settling with what you’ve got, but it’s worth keeping an eye on your life insurance to make sure it’s working as hard as you are. If it’s been a few years since you last looked at your policy, or if your circumstances have changed with work, your income, or more children, then it could be a good time to review your level of cover and inclusions.

The Real Family Protection survey found that almost 30% of Aussies are unsure if their level of cover would be enough to meet their family’s needs or whether they have cover in place at all. Instead of keeping yourself up at night with more things on your mind, consider reviewing your policy by factoring in how your needs have changed over the years. You might find your level of cover just isn’t cutting it for what you want for your loved ones when you pass away. After all, if you’re paying for life insurance then there’s no reason you shouldn’t have maximum peace of mind!

What’s Next?

You can use the Life Insurance Calculator to determine how much cover will be right for you, remembering to take into consideration all factors such as income, any debts and potential risk factors.

Once you’re happy with your cover amount, you can request a life insurance quote. Just answer a few simple questions and a specialist will call you (Monday to Friday, 8am to 8pm, AEST) to discuss your cover options and pricing. As long as you are an Australian resident and aged between 18 and 64, you can apply for a life insurance policy.

Once your policy is accepted, you will have peace of mind knowing you are protecting yourself, your lifestyle and your future.

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1 Life Insurance Adequacy - RiceWarner