Do I need life insurance? If so, how much?
According to Rice Warner 42% of Australians are underinsured.
As a rule of thumb a couple both aged 40 with 2 children, typically need $1.0 M to $3.0 M of life & Total & Permanent Disablement (TPD) cover to fully protect themselves.
If other people are financially dependent on you (e.g. spouse, kids) then Life cover and TPD cover is essential. If you have no financial dependants then life insurance is not important, but TPD cover is essential. Income protection cover is also essential.
Life cover pays a lump sum if you pass away. It gives your family money to repay debt and meet future living expenses.
TPD cover pays a lump sum to you. It give you money to meet medical bills, repay debt and meet future living expenses.
Income protection cover replaces your income if you are not able to work for health reasons.
Minimum Life & TPD cover = home loan value, or debt required to buy your first home. We suggest to include an additional amount to cover your annual living expenses while your children are financially dependent on you.