How much Life Insurance cover do I need?

Having the right amount of Life Insurance is a key part of ensuring you and your loved ones get the financial support you really need at claim time.

Unfortunately many Australian families don’t have appropriate Life Insurance to meet their needs.

According to Rice Warner, a leader in providing research and advice to superannuation and wealth management industries, the median level of:

  • Life Cover only meets 61% of our basic needs
  • Income Protection Insurance meets 16% of our basic needs
  • Total and Permanent Disability Insurance (TPD) meets 13% of our basic needs^.

 

Calculating how much cover you need

 

Some of things you may need to think about when determining how much Life Insurance you need:

  • your current debt levels (e.g. home loans, personal loans and credit cards)
  • how many dependants you have and how old they are
  • the cost of replacing your income or your partner’s income for an extended period
  • future education expenses for your children (e.g. school and university fees)
  • ongoing household expenses (e.g. utility bills, groceries and insurances)
  • lifestyle costs (e.g. sport and music lessons, birthdays and holidays)
  • the cost of child care and home assistance if you had to pay for someone to take over from you or your partner

 

 

What types of cover are available?

 

Life Cover

  • Protect the financial security of your loved ones if you die or are diagnosed with a terminal illness.
  • Apply for up to $15 million of cover.
  • $15,000 advance to assist with funeral costs.

Income Protection Insurance

  • Protect your income if you become ill or injured and can’t work.
  • Provides up to 75% of your income (up to $25,000 per month).
  • Choice of 30 or 90-day waiting period.

Total & Permanent Disability Insurance (TPD)

  • Protect yourself and your family from financial stress if you’re permanently disabled and unable to work.
  • Apply for up to $5 million cover.
  • Protection for mental illness included.

Trauma (Critical Illness) Insurance

  • Focus on your recovery if you suffer from a critical illness.
  • Apply for up to $2 million cover.
  • 38 conditions covered including cancer, heart attack, stroke and coronary artery disease.

Disclaimers

Source:

^Australia’s relentless under-insurance gap, Rice Warner Actuaries, 8 September 2016

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