How much Life Insurance do you need?

What better way is there to prepare for the future than to get life insurance? However, getting a life insurance policy is one thing. Figuring out how much coverage you and your family need is another.

So, the question is: How would you be able to compute just how much life insurance you need?

Below, I’ve written up simple guidelines that will help answer the question above.

Related: How to choose a life insurance policy?

Computing how much Life Insurance You Need

1. Keep an annual planner.

Insurance coverage is context-dependent. In other words, just how much you need to cover for your expenses depends on your circumstances. Keeping an annual planner will give you a clue on the exact figures of how much you really need.

Take into account all expenses that you incur such as loans, car and house mortgage, payment for utility bills, food, and others.

2. Obtain some help from life insurance calculators.

How much coverage you need would also depend on the balance between your expenditures and your income. The more bills you’re paying off, the higher coverage you might need.

Our insurance calculators can help you figure this out.

• Life insurance needs

In the unfortunate event that you are unable to work (either from death trauma or illness), this will give you an approximate amount of how much insurance you need to cover for your expenses.

• Income protection insurance

If you can’t work due to a debilitating condition, this will give you an estimate on how much coverage you’re eligible.

Conclusion

Wrapping up, though a higher coverage might mean you have to pay for a higher premium, this isn’t always the case. Your life insurance broker can give you the best options on the right personal insurance packages for you that are within your budget.

Also Read:
What are the different kinds of life insurance?
Is Life Insurance Worth the Cost?
Types of Life Insurance Payouts
High-Risk Life Insurance
Learn all about Life Insurance in Australia

Reviewed by Greg Maguire

Greg Maguire reviewed this article to make sure the information is accurate and reflects current insurance practice. It is general advice only and does not take your personal circumstances into account.

Greg Maguire is an Authorised Representative (No. 255354) of AD Advisory Services Pty Ltd, ABN 68 005 830 802, AFSL 237058.

Greg Maguire

Principal

Greg Maguire is the founder and principal of Absolute Insurance, a family-run Perth life insurance broker he runs with his wife Steph. Greg has spent more than 20 years helping Western Australian families and business owners protect what matters most, with life insurance, income protection, TPD and trauma cover from Australia's leading insurers.

Before insurance, Greg was a primary school teacher, and that same patient, one-to-one approach is how he still works today. He takes the time to understand your situation, explains your options in plain English, and stands beside you and your family if you ever need to claim.

Greg holds an Advanced Diploma of Financial Planning from Deakin University and a bachelor's degree from Edith Cowan University. He is an active member of the local community through the Chamber of Commerce and Industry WA and Baldivis Rotary.

Greg Maguire is an Authorised Representative (No. 255354) of AD Advisory Services Pty Ltd, ABN 68 005 830 802, AFSL 237058.