Life Insurance Coverage Guide

How much Life Insurance Do I Need? How Much Life Insurance Cover (Sum Insured) Do You Need?

The calculation of how much life insurance cover you need or the sum insured is an individual issue and varies accordingly as will your life insurance premium. It will depend on the stage you are at in life. Whether you are single or married, whether you have debt and how much, whether you have a spouse and children who need financial provision made for them, whether you have a disabled child or other beneficiary who may need special needs and particular sums of money ongoing, etc., etc.

The more financial obligations, the more children you have, the more assets requiring protection, previous marriage obligations, bank guarantees, mortgages, growing childrens needs such as university education, sporting costs, new vehicle costs, reasonable lifestyle costs … the more life insurance cover that is needed.

To submit an online quote Life Insurance request, go to the online quote life insurance page.

Generally, the following outlines are a guide to establish how much life insurance cover you will need and the applicable life insurance premium or life insurance premiums will be incurred. We also have a life insurance cover calculator for further assistance in calulating the appropriate level of life insurance cover for your particular situation.

Single WITHOUT Dependants and WITHOUT Debt

You will probably need none or very little life insurance cover unless you wish to bequeath money to somebody special.

To submit an online quote Life Insurance request, go to the online quote life insurance page.

Single WITH Debt and WITH Dependants

You will need to provide enough money to pay out all your debts. And, you will need to provide income for your children’s continued living and growing lifestyle, including education. Normally, a sufficient lump sum can be provided which can be invested by them, or on their behalf (as set up in your Will or Estate Plan) at a sufficient rate of investment to provide them an ongoing income without using the capital invested.

A simplified example of how to calculate an appropriate level of life insurance cover is outlined below:

· If the estimated income required by the family going forward, is say, $60,000 – and the assumed or estimated rate of interest on a lump sum investment is (say) 6% = $1M lump sum is required to provide this amount. ($1M x 6% = $60,000 per year gross. Remembering that taxation will apply to the earnings, so the taxation implication must be considered when doing your calculations, as the taxation will of course reduce the gross amount accordingly)
· If the current debt is, say, $400,000 mortgage + $40,000 owing on vehicle(s) + $30,000 owing on credit card(s) = $470,000 is required to pay out the debts.
· Costs for a funeral need to be considered. Where will the payment for this come from? An estimate of a simple funeral cost, say, = $5,000.

Therefore, a minimum amount of life insurance cover required as outlined above would be:

Funds for investment purposes to provide gross
Ongoing income = $1,000,000
Funds to pay out all loans = $470,000
Funding for a funeral = $5,000

Total sum insured = $1,475,000 <<— This is the level of life insurance cover that we would recommend in this situation.

To determine the likely life insurance premiums for your situation, submit an online quote Life Insurance request, go to the online quote life insurance page.

Disclaimer
All figures and estimates are not to be taken as advice in any way, but are for illustrative purposes only. Please contact us through the contact us page on this web site for further costing information or advice.

Married WITH Debt and WITH Dependants

You will need to provide enough money to pay out all debts. And, you will need to provide income for your spouse, and your children’s continued living and growing lifestyle, including education. Normally, a sufficient lump sum can be provided which can be invested by them, or on their behalf (as set up in your Will or Estate Plan) at a sufficient rate of investment to provide them an ongoing income without using the capital invested.

A simplified example is outlined below:

· If the estimated income required by the family going forward, is say, $90,000 – and the assumed or estimated rate of interest on a lump sum investment is (say) 6% = $1.5M lump sum is required to provide this amount . ($1.5M x 6% = $90,000 per year gross. Remembering that taxation will apply to the earnings, so the taxation implication must be considered when doing your calculations, as the taxation will of course reduce the gross amount accordingly)
· If the current debt is, say, $500,000 mortgage + $60,000 owing on vehicle(s) + $30,000 owing on credit card(s) = $590,000 is required to pay out the debts.
· Costs for a funeral need to be considered. Where will the payment for this come from? An estimate of a simple funeral cost, say, = $5,000.

Therefore, a minimum amount of cover required as outlined above would be:

Funds for investment purposes to provide gross
Ongoing income = $1,500,000
Funds to pay out all loans = $590,000
Funding for a funeral = $5,000

Total sum insured = $2,095,000 <<— This is the level of life insurance cover that we would recommend in this situation.

The more financial obligations, the more children you have, the more assets requiring protection, previous marriage obligations, bank guarantees, mortgages, growing childrens needs such as university education, sporting costs, new vehicle costs, reasonable lifestyle costs … the more life insurance that is needed.

To submit an online quote Life Insurance request, go to the online quote life insurance page.

Life Insurance Policy Premium Examples

The following tables give you examples of the low relative cost of Life Insurance cover and applicable life insurance premiums. Please note that many factors affect your life insurance premium incuding the work you do, whether you are a smoker, your age and life insurance cover / sum insured and should only be taken as a guide.

FactorMaleFemale
Age3542
EmploymentManagement ConsultantSecretrarial / Administration / Office
SmokerNon SmokerNon Smoker
Annual Gross Income$100,000$80,000
Sum Insured (Death Cover)$1,000,000$500,000
Monthly Life insurance Premium$53.22$31.63

NOTE: All life insurance premium figures and estimates are not to be taken as advice in any way, but are for illustrative purposes only.

Compare Life Insurance Policies

There are many different types of Life Insurance Policies available and cheap life insurance policies such as may be advertised on TV may not be the best option for you. We can help you compare life insurance policies to identify the best life insurance policy for your situation. So if you would like to compare life insurance options for your situation simply use our contact us page to send us an online inquiry or submit an online quote request form by going to the life insurance quotes page.

Let us help you!