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How much life insurance do you need?

Man leaps excited onto couch with woman because they both just got comprehensive life insurance coverage.

After you’ve worked out whether or not you need life insurance, the next step is working out what level of cover you should opt for. The key? Finding the right balance for your situation.

You don’t want to be underinsured, or your family might be left in the lurch and struggling to pay bills without your income to help. But you also don’t want to be paying outrageously high premiums for a level of cover you don’t really need.

Here are some important questions to consider for working out how much life insurance coverage you may need.

RELATED: Cheap life insurance

Another thing you might be wondering is when you’ll need to buy a life insurance policy.

You can generally buy a policy up until you’re about 65 years old, and renew it up until you’re 99. But remember: life insurance premiums get more expensive as you get older, so thinking about life insurance early on can be a good way to save.

The maximum benefit you can claim may also depend on your age. As you get older, your policy will pay a smaller amount.

Choosing a life insurance term

Life insurance in Australia is generally what’s called ‘term life insurance’. That means, it covers you for a predetermined amount of time.

You’ll need to nominate the term when you buy your policy, which is why most people have life insurance to cover them until retirement age, at around 65.

This is a pretty basic method to help you work out what level of life insurance cover might be appropriate for you. But keep in mind, your circumstances are always unique and it may not be right for everyone. For example, if you have a lot of savings, don’t have kids or if you’re closer to retirement age, you’ll likely want to consider a lower level of cover.

So use this method as a guide, but if you’re not sure how much life insurance would be appropriate for you, it may be worth getting some professional financial advice before going ahead.

Once you’ve worked out how much life insurance you need, the next step is finding a killer deal so you can score a policy without breaking the bank. Head over to our life insurance page to compare some of the best offers in the market today or check out the options below.

Olivia Gee
Olivia Gee
Money writer

Olivia has two years experience as a finance journalist, working across insurance, property and banking.

Evlin DuBose
Evlin DuBose
Senior Money Writer

Evlin, RG146 Generic Knowledge certified and a UTS Communications graduate, is a leading voice in finance news. As Mozo's go-to writer for RBA and interest rates, her work regularly features in Google's Top Stories and major publications like

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