Life Insurance Needs Calculator
Estimate how much life insurance cover you need to protect your family's financial future.
| Component | Amount |
|---|---|
| Income replacement (70%) | $0 |
| Mortgage clearance | $0 |
| Other debt clearance | $0 |
| Less: partner income contribution | −$0 |
| Less: existing assets | −$0 |
| Gross cover needed | $0 |
| Less: existing cover | −$0 |
Income replacement based on 70% of income × years to retirement. This is an estimate — actual needs depend on lifestyle, dependants, and individual circumstances.
How Much Life Insurance Do You Need?
Life insurance provides a financial safety net for the people who depend on you. If you were to die unexpectedly, a lump sum payout can replace your lost income, clear debts so your family isn't burdened, and fund future expenses like children's education. Getting the cover amount right — not too little and not unnecessarily over-insured — is the key challenge.
Income Replacement: The Core of Cover Calculations
The most important function of life insurance for working Australians is replacing your income for the years you can no longer earn it. A standard approach is to target 70% of your annual pre-tax income multiplied by the number of years until you would have retired. This accounts for the fact that you would have spent roughly 30% of your income on yourself, while the remaining 70% supported your family's lifestyle and financial obligations. For a 40-year-old earning $120,000 with 27 years to retirement, the income replacement component alone would be approximately $2.27 million — far more than most default super policies cover.
Debt Clearance: Protecting the Family Home
Your mortgage balance and any other significant debts should be cleared in full from the life insurance payout. A surviving partner managing on a single income should not have to grapple with a large mortgage on top of the emotional and practical burden of bereavement. This calculator adds your full mortgage balance and other debt balances directly to the cover requirement — independent of the income replacement component.
Partner Income and Liquid Assets
If your partner earns an income, they can be expected to continue supporting the family financially. This calculator conservatively assumes a partner income contribution equal to 50% of their annual earnings multiplied by the years to retirement — reflecting that they may also need to reduce work hours to care for children. Similarly, liquid savings and investment assets can be drawn down to support the family, so these reduce the gross cover needed. Note that illiquid assets like superannuation (which may not be accessible immediately) are not counted here.
Super Death Benefits vs Separate Life Cover
Most super funds include a default level of death benefit insurance for eligible members. While this provides a useful baseline, the default amount is often far below what your family would actually need. Super death benefits are paid to your dependants (or your estate if you have no dependants), generally tax-free for financial dependants. Holding additional cover outside of super can give greater flexibility in how the benefit is structured and paid.
Term vs Whole-of-Life Insurance
Term life insurance provides cover for a set period — typically until your youngest child reaches adulthood or until you reach retirement age. It is the most common and cost-effective choice for Australians with mortgages and young families. Whole-of-life (or permanent) insurance covers you for your entire life and includes an investment component, but premiums are substantially higher. For most Australians, a term policy that covers the working years is the most efficient way to protect your family.
Review After Every Major Life Event
Your life insurance needs change over time. Buying a home significantly increases the amount of cover required. Having children adds dependants. Paying off your mortgage reduces the debt component. A significant pay rise increases the income you need to replace. Make it a habit to review your cover whenever a major financial or family event occurs — and at least every two to three years as a baseline.