How much Life Insurance do I need?
Having the right amount of and Income Protection Insurance is important, and yet, many Australian families are under-insured.
Rice Warner, a leader in providing research and advice to superannuation and wealth management industries, released a report on underinsurance in 2015 which highlights that the median level of Life Cover only meets 61% of our basic needs, which would cover non-mortgage debts and sustain the current living standards till the age of 65.
If the unforeseen were to happen, you certainly wouldn’t want your family to suffer the additional stress of not being able to pay the mortgage or ongoing household bills on top of dealing with the extreme emotional distress. When determining how much Life Insurance you will need it’s important to think about:
- Current debt – i.e. mortgages, personal loans and credit cards, and the number of dependents you have.
- Your current income.
- Future education expenses for your children – i.e. school and university fees.
- Ongoing household expenses, including utility bills, groceries and insurances.
- Lifestyle costs – sport and music lessons, birthdays and holidays.
- Childcare and home assistance – if you or your spouse is a stay-at-home parent, you will need to cover the cost of employing a carer for the children, someone who can also undertake home duties.
We understand it can be difficult to know where to start to work out how much Life Insurance you need and what to consider. But, it’s an important step to undertake to ensure your loved ones are protected.