Whether you’re thinking about life insurance for the first time or you’ve just never gotten around to reviewing your policy, working out the right level of cover can be confusing.
The good news is you don’t have to spend ages figuring it out. Here’s how to do it quickly and easily.
1) Calculate your expenses
Work out how much money your loved ones (or you) would need if you were no longer around or unable to work. You’ll want to factor in things like:
- Your mortgage, car repayments, credit cards and other debts
- Childcare and education expenses
- General living expenses such as groceries, utilities and transportation
- Potential future expenses such as medical bills and funeral costs
You can also speed up the process by using our life insurance calculator to calculate how much cover you might need.
2) Decide on the type of cover you need
Get to know the four main types of life insurance in Australia:
- Life cover: pays a nominated beneficiary (such as your partner) a lump sum if you die or are diagnosed with a terminal illness.
- Trauma cover: pays a lump sum for certain illnesses and injuries, like cancer or a heart attack.
- Total and permanent disability (TPD) cover: pays a lump sum if you can’t work again due to permanent illness, injury or disability.
- Income protection insurance: pays up to 75% of your usual income as instalments if you can’t work temporarily due to illness or injury.
The type of cover you need depends on your situation. For example, if you’re single and relatively young but work in a labour-intensive job, you might want income protection insurance and would consider TPD.
Or if you have a family and more financial responsibilities, you might want all four types of cover.
Some insurers offer discounts for bundled policies, and insurance premiums tend to be cheaper when you’re younger, so you’ll need to factor this in.
3) Compare policies
Once you have an idea of what type of policies suit you, and a rough estimate of how much cover you need, take a look at what different insurance providers offer.
This is where we can help. We compare life insurance policies from 10 of Australia’s leading providers – and it’s free to take out a quote.
Click below to start comparing policies, or talk to one of our life insurance specialists about finding cover that suits your situation and budget.
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LifeInsuranceComparison
.com.au's online quote comparison tool makes it easy to get quotes from 9 Australia's biggest life insurers
This article is opinion only and should not be taken as medical or financial advice. Check with a financial professional before making any decisions.
*ASIC, Default insurance in superannuation, December 2020.
** Cancer Council Australia, Facts and Figures, Jan 2021
^ Department of Health, Chronic Conditions in Australia, Jan 2021