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Life Insurance Calculator
Nina Rinella, Editor-in-Chief | Fact Checked | Updated 27 June, 2024
This life insurance calculator is designed to provide you with an estimate of how much life insurance and income protection cover you may need in the event that you pass away, become critically ill or injured, totally and permanently disabled (TPD) or if you become unable to work.
Please note the results provided by this calculator are an estimate only. Consider whether you need financial advice from a qualified adviser.
How much life insurance do I need?
How much life insurance you will need will depend on your personal circumstances; including your age, whether you have any dependents, your employment status, your superannuation and other assets, if you have any debts, your living expenses and the type of life insurance you want. This could include cover for death or terminal illness (often referred to as death cover or term life insurance), and provide cover if you are unable to work (income protection insurance) or if you become permanently disabled (TPD).
In Australia, you can switch policies and even hold multiple life insurance policies. The Federal Government’s website Moneysmart, suggests weighing up how much cover your family may need, as well as how much they would receive. It’s also worth noting that you may have life insurance provided through your super fund. You can read some tips from one of our life insurance experts on how to choose a policy.
How do you calculate the cost of life insurance?
Calculating life insurance premiums can be complex. What you will be charged is based on factors such as the type of insurance, the extent of your cover and the insurance provider you choose, as well as your medical history and if you are or were a smoker. Your occupation and hobbies – like competing in extreme sports or potentially dangerous activities – are factors that may also influence your premiums. Canstar’s life insurance calculator could help you get started, as it highlights some of the key elements you may wish to consider. You can also compare life insurance with Canstar.
Should I choose Level or Stepped life insurance premiums?
Keep in mind that pricing for life insurance will vary depending on a range of factors, including whether you opt for stepped premiums or level premiums. According to Moneysmart, here are the key differences between the two:
- Stepped premiums are recalculated with each policy renewal, and usually increase each year based on the higher chance of a claim as you age.
- Level premiums are a higher premium charged at the start of the policy, with changes to the cost typically coming from administration fees, rather than changes to your age. This usually means increases happen more slowly over time.
What is a pre-existing condition for life insurance?
When you apply for life insurance, make sure you read the fine print and be honest with your insurance provider about any pre-existing conditions that you have. Typical conditions, ailments and illnesses that might be considered include asthma, cancer, depression, diabetes, high blood pressure, heart disease, kidney or liver disease, certain mental health conditions, or a stroke.
Does insurance cover old age?
Death cover, which is also known as term life insurance, usually covers you for death from natural causes, but ‘old age’, in itself, is not a medical condition. Life insurance providers usually consider your age, along with different factors, like whether you have any pre-existing conditions, in assessing your application and setting your premiums. What’s covered by any particular life insurance policy can vary, so it’s important to take the time to read the product disclosure statement (PDS) first. You can also speak to the insurance provider if you have any questions.
Find out more about: life insurance for over-50s and life insurance for seniors over 60.
How much does life insurance usually cost?
Canstar research shows that the average monthly direct life insurance premium cost for a policy with a $500,000 sum insured amount starts from as low as about $21 for a non-smoking female in her 20s, and goes up to about $613 for a male in his late 50s who smokes. This is based on quotes from Canstar’s 2024 Direct Life Insurance Star Ratings (May 2024).
What matters with life insurance?
Keep in mind that price isn’t everything when looking at life insurance cover options. When weighing up your options you could consider bundled cover (including total and permanent disability (TPD), trauma insurance or income protection insurance), level of cover, and the inclusions and exclusions offered. Speaking to a financial adviser or other qualified professional could be helpful to ensure you get the right policy for your needs and budget.
Does life insurance stop?
If you have life insurance through your super that includes term life insurance or TPD cover, it can potentially be terminated if you change funds, reach a certain age or stop making contributions. For a standalone policy, cover usually continues as long as you pay the premiums, although there is typically a maximum entry age for new policies. There is also an expiry age beyond which you may not be able to renew an existing policy.
