How much life insurance do I need?

When it comes to life insurance, you should think of it like a safety net – it’s something that can provide financial security and peace of mind for you and your loved ones. In other words, it can help your family with financial protection in the event of your passing, allowing them to maintain the quality of life you’ve built for them.

However, figuring out the right amount of life insurance can be more challenging. So let us provide you with some helpful tools to consider when deciding on the level of cover for your loved ones.

Why is life insurance so important?

Life insurance can help to safeguard against the unexpected. We can’t predict what will happen in the next five minutes, let alone the next five years, and none of us are immune from accidents, illnesses or untimely death.

However, a life insurance policy can provide a financial cushion for your loved ones. In the event of your death or terminal illness, it is designed to provide a lump-sum payout to your beneficiaries, which they can use to cover funeral costs, outstanding debts, mortgage payments and day-to-day living expenses, however they require.

Tailoring your coverage to your life stage

As you navigate through different life stages, your financial responsibilities and needs will change. That’s why it is a good idea to consider tailoring your life insurance coverage accordingly. Here are some tips for what to consider in your 20s, 30s, 40s, 50s and 60s:

Life insurance needs in your 20s: Building a solid foundation

In your 20s, you might be starting your career, renting an apartment or share house, and beginning to build a foundation for your financial future. While you might not have huge financial obligations, a life policy could help cover funeral expenses and any outstanding debts, such as student loans (e.g. HECS/HELP).

Life insurance needs in your 30s: Protecting your growing family

As you enter your 30s, your responsibilities might become greater as you settle down, start a family and potentially become a homeowner. A life policy could cover not only funeral expenses and debts, but also support your family's lifestyle financially, take care of mortgage payments, childcare costs, and more. It’s one way to help protect your loved ones financially to assist them maintain their standard of living should the worst happen.

Life insurance needs in your 40s: Navigating mid-life financial responsibilities

By your 40s, you may have accumulated more assets and financial responsibilities. Your children might be finishing school and heading off to university, and you could still have a mortgage and other debts. It’s a good idea to review and adjust your life insurance to account for such factors in order for your family to have the resources they need to manage existing debts, maintain their lifestyle and pursue educational goals if you were no longer there.

Life insurance needs in your 50s: Preparing for retirement and legacy planning

In your 50s, retirement may be on the horizon, so you may wish to consider a policy that not only provides for your family's immediate needs but also could help your partner’s retirement plans.

Life insurance needs in your 60s: Financial protection in later years

As you enter your 60s, your focus will probably shift towards preserving your wealth and setting up a more comfortable retirement. While your children might be financially independent, life insurance could still serve as a valuable tool to help take care of any outstanding debts or medical expenses and provide financial support to assist your family during a time of need.

Tailoring the coverage you need

You will need to take into account a range of factors to determine how much life insurance you need, from your current financial situation, to your future goals, and the needs of your loved ones. By reviewing your life insurance in each new decade of life and tailoring the coverage with either optional covers or amending the sum insured to your specific needs, you can rest easy knowing you have protection in place for your family.

Our expert team can help you find the right cover to protect you and your family's financial security, so start comparing a range of life insurance policies today.