How much life insurance do I need?

Once you’ve decided to get life insurance, the next question is likely to be ‘how much cover do I need?'.

It is important to get the right amount of cover so you and your family can help be financially protected if something happens to you.

How much life insurance you need will depend on your personal circumstances, your financial situation, and your reasons for taking out life insurance in the first place.

For tailored advice on how much cover you need, you should speak to a financial adviser.

Otherwise, some things to consider are outlined below.

Wife and husband checking life insurance cover on their laptop

So, how much Life Cover might you need?

The Financial Services Council (FSC) estimates that around 1 million Australians are underinsured for death and total and permanent disablement insurance and 3.4 million for income replacement insurance. The FSC research report shows that, where you require full debt coverage, for instance where you have a mortgage, a simple calculation of between 5 – 10 times your salary may provide adequate coverage and financial protection for you and your family.

When calculating the amount you might need, it is important to consider events such as:

  • Paying off a mortgage or an on-going cost like rent.
  • Paying off other debts like credit cards and government loans.
  • Expenses such as child care and school fees.
  • Having disposable income to pay for ongoing day-to-day living expenses.

You should also keep in mind that you and your family may receive, or be able to access money from:

  • Your superannuation.
  • Savings.
  • The sale of an asset or investment.
  • Support from extended family.

The Australian Securities and Investments Commission’s Moneysmart website has a life insurance calculator that can also help you work out how much cover you might need.

For tailored advice on how much cover you need, speak to a financial adviser.

How much cover can you get?

The maximum amount of Life Cover you can apply for often depends on your age and income when you apply for insurance.

With Medibank Life Insurance, the maximum Life Cover people aged 18-45 can apply for is $2,500,000. For people aged 46-55 the maximum is $1,500,000, age 56-60 it’s $750,000 and for ages 61-70 it’s $500,000. The minimum Life Cover you can apply for at any age is $50,000. The amount you can apply for can also be dependent upon your annual income.1

Remember too, that life insurance isn’t just about helping protect your family financially if you pass away. There are several different types of cover that can often be added to your life insurance, that can protect you and your loved ones in a broader range of circumstances.

With Medibank Life Insurance, you can add cover to help if you become Totally and Permanently Disabled,2 if you suffer a Critical Illness,3 and even cover to protect your children4 in some of these circumstances. The same process applies here too, whereby the maximum amounts you can apply for, are based on how old you are when you apply, and in some instances, your annual income.

Do I need life insurance if I have superannuation?

This can depend on how much life insurance cover you need. Most super funds do provide life insurance, so it is important that you check the level of cover you may have in super and evaluate if you require more.

Ready to get or talk about life insurance? Have a look at the Medibank Life Insurance PDS. You can also get a quick quote online or call the Medibank team on 1300 152 271 if you’d like to talk to us.

 

Things you should know

1 Eligibility criteria apply. Refer to the PDS.

2 For details on the optional TPD Cover, including definitions and eligibility criteria, please refer to the PDS.

3 For details on the optional Critical Illness Cover, including definitions, qualifying periods, and eligibility criteria, please refer to the PDS.

4 For details on the optional Child Cover, including definitions, qualifying periods, and eligibility criteria, please refer to the PDS.

Life Insurance

Medibank Life Insurance and Medibank Income Protection (collectively Medibank life insurance) are issued by the insurer, Zurich Australia Limited ABN 92 000 010 195 AFSL 232510 (Zurich). NEOS Direct, a registered business name of NDLI Pty Ltd ABN 70 665 747 277 AFSL 547119, distributes and services Medibank life insurance, which is promoted by NEOS Direct's authorised representative Medibank Private Limited ABN 47 080 890 259 (AR No. 286089) (Medibank).  

Any advice provided is general only and doesn’t consider your objectives, financial situation or needs. You should consider these factors, the appropriateness of the advice, and carefully read the relevant Product Disclosure Statement (which sets out the product terms, conditions and exclusions), Target Market Determination and Financial Services Guide before making a decision to acquire, or continue to hold, the product.

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