7 questions to determine how much insurance you might need

Everyone's different, so the cover you require will depend on multiple factors.

Knowing what level of cover you require can be tricky, so it’s worth thinking about a few things first, such as—to what extent you and any loved ones rely on your income, how additional costs stemming from an injury, illness or death might be covered and how existing debts would be paid off.

It’s also a good idea to determine up front what you can afford, and if you have any existing cover (you might have a standalone policy or insurance through super), that it is adequate.

After all, research shows 60% of families with dependent children in Australia don’t have enough insurance to cover household expenses for a year if the family bread winner were to pass away1.

What types of insurances are there anyway?

You can buy different forms of personal insurance through your super fund, which is where more than 70% of policies are held currently2, or via an insurance company, broker or adviser. 

The four main types of cover, which aren’t all available through super, include life insurance, income protection, total and permanent disability (TPD) and trauma insurance.

What questions should I be asking myself?

Whether you’re looking at life, income protection, TPD or trauma insurance, there are a range of questions you could ask yourself to help determine the level of cover you might need, including:

  1. How much money would you or your family need to pay off your loans or unpaid debts?
  2. How would immediate expenses be covered—medical or funeral bills if you passed away?
  3. Do you have savings, an emergency fund, assets, investments or super that could help?
  4. Do you have paid leave entitlements if you were injured or became ill?
  5. Might you be eligible for government benefits or workers’ compensation?
  6. How would you cover the cost of treatment and rehabilitation if it were required?
  7. Would you need to make any modifications to where you live if you were less mobile?

Other things to consider

It’s important to review your cover whenever your personal circumstances change to ensure you’re not underinsured and that you’re not over insured. Also, always read the product disclosure statement carefully so you know if a product is suitable to your needs.

For further guidance on how much cover you may require, speak to your adviser. And, if you need help finding one, call us on 131 267 or use our find an adviser search function.

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Important information

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It’s important to consider your particular circumstances and read the relevant Product Disclosure Statement before deciding what’s right for you. This information hasn’t taken your circumstances into account.

This information is provided by AMP Life Limited. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. All information on this website is subject to change without notice.

Although the information in this article is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decisions. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.