How Much Life Insurance Do I Need?

with ATB Wealth Strategies, Sydney

How Much Life Insurance Do I Need?

You know this cover is crucial to ensuring your dependents have the same quality of life, but how much life insurance do I need?

Putting a value on your existence is challenging, complicated, and can initially appear as a somewhat morbid task. As humans, we’re typically uncomfortable about contemplating our own demise — despite the fact that, inevitably, it will happen to us all.

That said, ensuring you have sufficient safeguards in place to protect your dependents in the event of your death provides welcome and comforting peace of mind — knowing that those who rely on you will not have to cope with extra financial burdens and obstacles when you’re no longer around.

At ATB Wealth Strategies, our specialist life insurance financial advisors provide an expert, sympathetic, and understanding approach to planning your beneficiaries’ financial futures. Have an informal chat with us today to learn more about how we ensure your family is sufficiently protected.

How Much Life Insurance Is Needed for My Circumstances?

Understandably, there’s no one-size-fits-all figure to answer how much life insurance is enough.

Personal circumstances, the cover you require, and who you’re looking to benefit upon your death can all affect the insured sum. However, in essence, it’s perhaps most straightforward to consider how much your dependents need to be financially comfortable without your income and assistance.

To estimate a ball-park figure for how much life insurance should you have, ask yourself the following questions:

  • What Do You Need to Insure? Cover for disability, terminal illness, funeral expenses, or for your spouse and children’s livelihood and education.
  • Who Are You Planning on Helping? Spouses, children, ex-spouses, siblings, parents, etc.
  • How Long Will They Require Financial Assistance? Think about the ages of those who currently depend on your income. How soon before they can support themselves?
  • Special Circumstance Needs? Are any of your potential beneficiaries physically impaired or with particular educational or care requirements?
  • Do You Have Significant Debt? You may require additional or more targeted cover if you have an outstanding mortgage, credit card, or automotive liabilities.
  • Do You Have Any Savings? Not just how much cash you have in the bank, but also how readily your fixed assets can be liquidated to meet your loved ones’ immediate needs.
  • Does Your Partner/Spouse Have Retirement Planning? If so, you may require less coverage than those whose wife or husband lacks their own financial security.

There are many online calculators that can help to gauge your life insurance requirements — but remember, these are only estimates.

For a detailed and thorough approach to planning your financial future, have a relaxed conversation with us now.

How Much Life Insurance Do I Need Rule of Thumb

If all the numerous above considerations seem a little overwhelming, there are three traditional and rapid rules of thumb for calculating how much life insurance do you really need.

Financial Advisor Balmain.

1. The 10 Method

It’s the most common system touted by online blogs, but also the most inaccurate — basically, you multiply your current annual income from all sources by ten. And that’s the answer to “how much life insurance do you need?”

The issue is, that it doesn’t consider your family’s personal circumstances — dependency, disabilities, debt obligations, etc. — or savings or existing life policies.

2. The 10+10 Method

A similar system to calculating how do you know how much life insurance you need is the 10+10 method.

The process is the same as the x10, but additionally, you also factor in a further $10,000 per child for every year they have left in education.

3. The Asset and Liability Method

Possibly the most precise rule of thumb system to discover how much life insurance should you buy.

  • First, calculate all your current debt liabilities — including future funeral expenses.
  • Second, consider how many years your beneficiaries will need assistance — then multiply your current income by that figure.
  • Third, calculate the amount you need to pay off your mortgage.
  • Fourth, assess the value of any requirements for your children — including care, special needs, and education.
  • Finally, add all these figures together — this is an approximation of how much life insurance you require.

If you’re not comfortable with numbers, don’t worry! Speak to us today at ATB Wealth Strategies, and allow us to show you what’s possible for your life insurance needs.

Let us show you what’s possible for your life insurance needs.

How Much Life Insurance Can I Buy?

Wondering exactly how much life insurance can I get? In short, there’s a simple answer — as much as you want.

Multiple policies are not only allowed in Australia — but also fairly common. Many self managed super funds include life insurance, so if you have more than one, it’s possible that you may already have more than one example of cover.

However, despite having a policy already in place in a super, many conscientious Australians decide to take out additional insurance — as their existing safeguarding is insufficient for the future requirements of their loved ones, or since the majority of modern super life coverage lacks key inclusions such as trauma insurance.

Equally, there’s technically no limit to the value of life insurance you can have. Although insurance companies are usually unconcerned over the total number of policies — they may consider the sum of your aggregate benefits.

Insuring your life for hundreds of millions of dollars, yet having only one dependent and no outstanding liabilities may raise a few eyebrows. Remember the case of John Darwin?

So, if you’re contemplating how much life insurance to buy — speak to us first!

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There’s little point pursuing a variety of numerous and expensive covers if one, straightforward policy is sufficient. 

Furthermore, our team of specialists at ATB Wealth Strategies are more than happy to examine any existing life insurance cover you own — and scrutinize it to ensure it meets you and your loved ones’ expectations.

The Ultimate Answer to How Much Life Insurance Do I Need Australia

When asking yourself how much life insurance cover do I need — the aforementioned methods, calculations, and systems can all be a valuable starting point to begin considering your family’s and dependent’s financial stability.

However, at best they’re vague — and at worst, they could leave your loved ones with insufficient security for their futures.

The best way to evaluate, calculate, and plan your life insurance requirements is to talk to us today at ATB Wealth Strategies. Our in-house specialists have a singular ethos — to make life insurance assessment and delivery straightforward, understandable, and affordable for everyday Australian families.

Remember, it’s never too early to begin considering life insurance — starting sooner can lead to significantly more cost-effective premiums. So, start the future planning your loved ones need and deserve by asking us directly how much life insurance do I need.

Don’t run the risk of taking out a policy that provides inadequate protection and costs a small fortune.