How Much Life Insurance Do I Need in Australia?

One of the most common questions we hear at Covermate Life is: “How much life insurance do I actually need?” The answer isn’t the same for everyone, but there are some key guidelines that can help you work it out.

As a general advice life insurance broker in Sydney, we help Australians compare cover from leading insurers such as AIA, Zurich, TAL, ClearView, MLC, and OnePath. Here’s what you should know.

Factors to Consider

When working out how much life insurance you need, think about:

1. Your Income

A common rule of thumb is to take out 10–15 times your annual income. This provides enough for your family to replace lost earnings, pay bills, and maintain lifestyle.

2. Debts & Liabilities

Add up your mortgage, personal loans, car finance, and credit cards. Your cover should be enough to clear these, so your family isn’t left with ongoing repayments.

3. Dependents

The more dependents you have (children, spouse, elderly parents), the greater your cover should be. Consider school fees, university costs, and living expenses.

4. Everyday Living Costs

Groceries, utilities, transport, childcare – all of these need to be accounted for to maintain your family’s standard of living.

5. Future Goals

Do you want to provide for your children’s education? Pay off your partner’s mortgage? Leave a financial legacy? These goals will influence your cover amount.

Example Calculation

Let’s say you earn $100,000 per year, owe $500,000 on your mortgage, and want to provide $20,000 per year for 15 years to support your family’s living costs.

• Income replacement: $100,000 x 10 = $1,000,000

• Mortgage: $500,000

• Living costs: $20,000 x 15 = $300,000

  
  

Total suggested cover = $1.8 million

Common Question: Is Life Insurance Too Expensive at Higher Cover Levels?

Not necessarily. Premiums depend on age, health, smoking status, and occupation. Brokers like Covermate Life compare multiple insurers, helping you balance the right level of cover with an affordable premium.

FAQs

Q: Is there a minimum amount of life insurance I need in Australia?A: No, but most people start with enough to clear debts and provide income for dependents.

Q: What happens if I take out too little cover? A: Your family may face financial stress if your insurance payout doesn’t cover debts or living costs.

Q: Can I change my cover later? A: Yes, you can usually increase or reduce cover as your circumstances change.

Q: Do I need life insurance if I have superannuation?A: Many super funds include some default cover, but it is often too low to meet most families’ needs.

General Advice Disclaimer

At Covermate Life, we provide general advice only. This means we can explain the features of policies and compare insurers, but we don’t take into account your personal objectives, financial situation, or needs. Always read the Product Disclosure Statement (PDS) before making a decision.

Call to Action

Want to know how much life insurance is right for you? Speak to the team at Covermate Life, a trusted life insurance broker in Sydney and across Australia.