Do I Really Need Life Insurance? | Covermate Life

insurance is something most Australians have heard of, but many are unsure whether they truly need it. With busy lives, financial commitments, and competing priorities, it’s natural to question whether taking out a policy is worth it. The reality is that life insurance can provide a financial safety net for your loved ones when they need it most, but whether you need it depends on your personal circumstances.

In this article, we’ll break down the key factors to help you decide if life insurance is right for you.

What is Life Insurance?

Life insurance pays a lump sum (called a benefit) to your beneficiaries if you pass away or are diagnosed with a terminal illness. This money can help your family manage ongoing living expenses, pay off debts, or secure their financial future.

There are also related products like Total and Permanent Disability (TPD) insurance and Income Protection, which cover different needs – but at its core, life insurance is about protecting the people who rely on you financially.

Who Really Needs Life Insurance?

You may want to consider life insurance if:

1. You Have a Family or Dependants

If your partner, children, or even ageing parents rely on your income, life insurance can help cover living expenses, education costs, and household bills if you’re no longer around.

2. You Have a Mortgage or Other Debts

Home loans, car loans, or credit card debts don’t disappear if you pass away. Without insurance, your family could be left with the responsibility of meeting repayments.

3. You’re the Main Income Earner

If most of the household income comes from you, the financial gap created by your absence can be significant. Insurance can bridge that gap.

4. You Want Peace of Mind

Sometimes it’s less about financial obligations and more about knowing your loved ones will have support if the worst happens.

Who Might Not Need Life Insurance?

Not everyone requires life insurance. For example:

• Single people with no dependants: If no one relies on your income, you may not need cover.

• Retirees with no debts: If your mortgage is paid off and your dependants are financially independent, the need may be reduced.

• Those with significant savings: If your assets can comfortably cover ongoing expenses and debts, you may not need additional insurance.

How Much Life Insurance Do I Need?

The right amount of cover depends on:

• Your debts (mortgage, loans, credit cards).

• Everyday living costs for your family.

• Future expenses (education, retirement savings for your partner).

• Any existing assets or superannuation.

  
  

A general guide is to consider 10–12 times your annual income, but the right amount varies for each person.

Common Myths About Life Insurance

• “It’s too expensive.” – Many are surprised at how affordable basic cover can be, especially if you’re young and healthy.

• “I don’t need it because I’m covered through super.” – Superannuation often includes some life cover, but the default amount is usually much less than most families need.

• “It’s only for older people.” – The younger and healthier you are, the cheaper your premiums typically are.

  
  

Final Thoughts

So, do you really need life insurance? The answer depends on your financial commitments, family situation, and future goals. If others rely on you financially, life insurance can be one of the most important safety nets you’ll ever put in place.

At Covermate Life, we provide general advice as insurance brokers, helping Australians understand their options and compare policies to find cover that suits their needs.

Disclaimer

Covermate Life provides general advice only and does not take into account your personal circumstances. You should consider whether the advice is appropriate for your needs and seek professional advice before making a decision.