Life Insurance Calculator

Work out a starting estimate of how much life insurance your family might actually need, based on your debts, expenses and existing resources, not a generic multiple of your salary.

Your details

Outstanding DebtsMortgage balance plus any other loans your family would need to clear

Funeral & Final ExpensesA common estimate is $10,000-$20,000

Annual Income to ReplaceHow much your family would need each year to maintain their lifestyle without your income

Years of Income Replacement NeededOften until the youngest child is independent, or your partner could support themselves

Children's Future Education CostsOptional, leave at 0 if not relevant

Existing Savings & InvestmentsResources already available to your family

Existing Life InsuranceCover you already hold, including any default cover through your super fund

Estimated life insurance gap

$1,245,000

Total need

$1,415,000

Income replacement total

$900,000

Existing resources

$170,000

This is a needs-based starting point, not the industry-discredited 'multiply your salary by 10' rule. It doesn't discount the income-replacement figure for investment returns a lump sum could earn while being drawn down, which would reduce the amount actually needed, and doesn't account for inflation over the replacement period. Try MoneySmart's own life insurance calculator for a more detailed estimate, and speak with a financial adviser before buying cover. Not financial advice.

How to use this calculator

1. Enter what your family would need to clear your debts and cover funeral and immediate costs.
2. Enter the annual income your family would need replaced, and for how many years.
3. Enter your existing savings and any life insurance you already hold, including default cover through super.
4. The calculator shows your total need, your existing resources, and the gap between them.

Why this isn't the '10x your salary' rule

You'll see rules of thumb like "get 10 times your salary in cover" all over the internet, but that figure isn't an official standard, and it ignores your actual circumstances entirely. Someone with no debt, no dependents and a paid-off house needs very different cover to someone with a large mortgage and young kids, even at the same salary. A needs-based approach, adding up what your family would actually need to cover and subtracting what they already have, gives a far more relevant starting figure than any flat multiple.

What this calculator doesn't capture

This is a simplified starting point, not a precise underwriting figure. It doesn't discount the income-replacement total for the investment returns a lump sum could earn while your family draws it down over time, which in reality reduces how large the lump sum needs to be. It also doesn't adjust for inflation over the replacement period, or account for changing needs as children grow up and become financially independent. MoneySmart's own life insurance calculator models some of this in more detail, and a financial adviser can tailor a figure to your exact situation, including whether income protection or trauma cover might matter more than a large life insurance payout.

FAQ

Do I need life insurance if I don't have kids?

It depends on whether anyone depends on your income or would be left with debts you'd otherwise have paid off, a partner, ageing parents, or joint debts like a mortgage. If nobody would be financially affected by your death, the case for cover is weaker.

Is the default life insurance in my super fund enough?

Often not, default cover through super is typically a flat amount that doesn't scale with your actual debts or family situation, and it can be surprisingly small for people with a mortgage and young kids. It's worth checking your super statement for the exact amount and comparing it against a needs-based estimate like this one.

How does the income replacement figure work?

It's a simple estimate: the annual income you want replaced, multiplied by the number of years you want it replaced for. In reality, a lump sum invested can support a similar income for longer than a straight multiplication suggests, since it can earn returns while being drawn down, so this is likely a conservative (higher) estimate.

Should I get life insurance inside or outside super?

Both have trade-offs. Cover through super is often cheaper and comes out of your balance rather than your take-home pay, but claims can take longer to pay out and the payout may be taxed differently depending on who receives it. Standalone cover outside super is usually more flexible on definitions but paid from your after-tax income.

How often should I review my life insurance cover?

After any major life change, having a child, taking on a bigger mortgage, a partner stopping work, or paying off debt, plus a general check every couple of years, since your needs (and often your income and premiums) shift over time.

Money tips, straight to your inbox

Free calculators, guides and the occasional useful thing. No spam, unsubscribe anytime.

Disclaimer

This is a needs-based starting estimate, not the 'multiply your salary by 10' rule, and not a precise underwriting figure. It doesn't discount the income-replacement total for investment returns a lump sum could earn while being drawn down, or adjust for inflation over the replacement period. Try MoneySmart's own life insurance calculator for a more detailed estimate. This tool provides estimates only, is not financial advice, and doesn't replace advice from a licensed financial adviser.