How Much Life Insurance Do I Need?

Get a quote

Everyone is different and therefore no ‘one answer fits all’ response can be provided. Consideration needs be given to your family’s financial position which takes into account personal assets, income, debt, expenses and life goals. However as a generalisation most personal risk advisers will recommend that you have life cover equivalent to a minimum of 10 times your average annual income. Life insurance must be tailored to your need and the level you require may be higher.

An important thing to remember when addressing the ‘how much’ question is that there are different types of life insurance. There is cover for death, disability, loss of income and a medical trauma. So the amount of cover you need is dependent upon not only your financial situation but under what circumstances you require cover and how important that is to you. This should be quite evident from the personalised results you obtained from the calculator. Some situations will require your focus more so than others.

If you or your partner were permanently disabled or died prematurely you need to consider the costs associated with:

  • Paying out the mortgage or remaining debts
  • Continuing the children’s education
  • Ensuring funds are available to replace any loss of family income
  • Keeping the family business running
  • Covering any medical of funeral costs
  • Meeting ongoing medical needs
  • Modifying your home
  • Supporting the ongoing household expenses
  • Maintaining your assets & investments
  • Continuing to save for the future and still achieve your life goals.

This is where a lump sum payment through a Term Life Insurance policy and/or a Total and Permanent Disability (TPD) Insurance policy would assist.

If you or your partner became sick or were injured and couldn’t work you need to consider the costs associated with:

  • Paying your mortgage or weekly rent
  • Supporting the ongoing household expenses
  • Providing for ongoing children’s education and costs
  • Maintaining your assets & investments
  • Covering additional medical costs as a result of the injury or illness
  • Continuing to save for the future and still achieve your life goals

This is where a regular income stream through an Income Protection policy would assist.

If you or your partner suffers a major medical illness (heart attack, cancer, etc) you need to consider the costs associated with:

  • Covering any medical associated with crisis recover
  • Funding a change of lifestyle
  • Paying out the mortgage or remaining debts
  • Continuing the children’s education
  • Ensuring funds are available to replace any loss of family income
  • Helping the family members achieve their life goals

This is where a lump sum payment through a Trauma Insurance policy or Crisis Recovery policy would assist.

It is important to note from the examples above that it is a combination of the various types of personal risk insurance that provide the best protection.

Based on your situation, either as a result of the calculator or through having a broader understanding of the impacts, you now know that the cover you require must be tailored to your situation. Many people fall into the trap of purchasing term life insurance without considering their needs and the impact of life’s hazards (injury, illness, permanent disability, medical traumas and death). The solution should be customised to provide a personalised risk management strategy that matches your needs. A good personal risk adviser can do this for you and usually within your budget.

Therefore the amount of life insurance cover you need really is a very personal question.

Helpful insurance info

We compare insurance options from Australia's most trusted providers:

About MultiCover

MultiCover is a free service designed to provide you with easy access to a range of financial service specialists that cover the important things in life, Family, Work and Play. Simply choose and select from a range of options.

We aim to provide you with not only choice in financial services and products, but also options in how you can shop, compare and select these financial products and services. Many of our customers like to speak directly with a specialist about the product or service they are considering, gaining the benefit from their experience and customising a solution. Others prefer

learn more about us

Insurance Info

Visit our channel

MultiCover is a referral service and not a financial service provider. The information on our website and other documentation is of a general nature only and does not take into account your personal financial situation, needs or objectives. None of this information is, or shall be deemed to constitute financial and/or other advice to purchase a product or service. We strongly recommend that you obtain professional advice prior to purchasing any financial product and/or service. Please see our site Terms of Use and Privacy Statement for more information.

We need some information about you to get started:


*Submitting your details and agreeing to our terms of use enables us to connect you to a Synchron insurance specialist who will provide the quote by email or phone.

VIDEO TITLE

Get an insurance quote