First home buyers

Do I need life insurance?

So you've heard about life insurance but do you actually need it? Read this guide to work out your needs.

Figuring out whether you need life insurance (and what type is suitable for you) can be confusing at the best of times. As we enter different stages of our life it is important to consider different types of insurance to ensure your loved ones are protected from unforeseen losses.

There are signs in life that suggest that you need cover.

Most people take out life insurance at the significant moments in life, including:

  1. Having kids
  2. Buying a house
  3. Changes financial situations
  4. Getting married

If you're in any of these situations it's a good general indicator to consider cover. To make sure you, take our one-minute quiz below:

Quiz: Do you need life insurance?

About this quiz

When do most people take out life insurance?



Source: Deloitte

Is there a perfect age to get cover?

This will usually depend on your needs at the time e.g. the life events that occur during that age and the financial obligations you have.

Age Life events Financial obligations Types of insurance to consider
  • Start full-time work
  • Move out of home
  • Start accumulating wealth
  • Everyday living expenses
  • Small personal debt
  • Income Protection
  • Increase in income
  • Purchase house
  • Increase in short-term debt
  • Marriage
  • Children
  • Short term debts
  • Spouse and children
  • Everyday living expenses
  • Mortgage
  • Life cover
  • Income protection
  • TPD
  • Trauma
  • Increase in earnings
  • Reduction of debts
  • Outstanding mortgage and personal debt
  • Investments
  • Everyday living expenses
  • Retirement fund
  • Life cover
  • Income protection
  • TPD
  • Trauma
  • Maximum earnings
  • Preparing for retirement
  • Less financial commitments as children move out
  • Outstanding mortgage and personal debt
  • Investments
  • Everyday living expenses
  • Retirement fund
  • Life cover
  • Income protection
  • TPD
  • Trauma
55 and Over
  • Protecting wealth accumulated
  • Retire from full-time work
  • Finance lifestyle with savings
  • Everyday living expenses
  • Any outstanding debts
  • Medical costs
  • Funeral Costs
  • Life Cover
  • Trauma Insurance
  • Funeral Cover

Based on where I'm at in life what type of cover do I need?

Everybody is different and cover requirements will change based on the events you encounter at different life stages. Its worth reviewing your life insurance every year to ensure you have enough cover in place. The graphic below gives an overview of key times to take out cover in different life stages.

Life Insurance States Graph

Do you still need life insurance if you're retired?

It is natural for the need for life insurance to reduce once people enter their retirement years and their financial obligations change. You may wish to decrease the amount of cover you have in future years but still have some in place to:

  • Provide a legacy to your surviving children in the event of your death
  • Cover funeral expenses
  • Tie up any final expenses such as legal fees or taxes

It is worth taking into consideration existing assets that may be used in the event of your death such as:

  • Superannuation
  • Savings
  • Property
  • Other assets such as car, contents

Do you need cover if you're young?

You may not require life cover at this stage but may want to consider funeral insurance to cover the cost of your funeral or TPD, Trauma or Income Protection to provide you with an income if you suffer a serious injury or illness.

What types of life insurance are available in Australia?

It's a good idea to understand the main types of cover you can get:


  • Life cover. Life insurance provides a lump sum benefit in the event of death or terminal illness.
  • Income protection insurance. Income protection offers an ongoing benefit of 75% of the policyholders regular income if they are forced to take time off work due to illness or injury. This benefit is usually paid monthly.
  • TPD insurance. Total permanent disability (TPD) insurance provides a lump sum benefit if the policyholder suffers a disability as defined in their policy.
  • Trauma insurance. Provides a lump sum benefit if the insured suffers a medical trauma that is specified in their policy. Most policies will cover up to 50 different conditions including stroke, cancer and heart attack.
  • Funeral insurance. Funeral insurance provides a lump sum benefit to cover funeral costs and other outstanding expenses. The maximum amount of cover that can be taken out is usually about $30,000.

Still unsure if you need cover? Ask yourself these questions

"Can my loved ones get by without my financial support?"

  • No - They are dependant on my financial support

Everyone is different and will require different levels of cover. Get a more comprehensive understanding of your individual policy requirements by speaking to a qualified adviser.

  • Yes - My loved ones will be just fine
While you may feel that because you don’t have anyone financially dependent on you there is no need to take out cover...this may not necessarily be the case. Other forms of “living insurance” such as Trauma and TPD cover ensure that you are supported financially if forced to take temporary or permanent time off work due to serious injury or illness.

"Do I have enough to support myself financially for an extended period of time if I am unable to work?"

  • No - I will need additional financial support

There are many types of cover to protect yourself against financial pressure if you were no longer able to work due to a serious illness or injury. An insurance consultant can guide you through the process of identifying the type of cover you may require and help you tailor cover closer to your needs through additional benefits. The different types of "Living Insurance" are listed below:

Income Protection:

Will provide 75% of your income paid monthly if you are forced to take time out of work due to an illness or injury. Some policies will provide additional payments to cover rehabilitation expenses

Total & Permanent Disability (TPD) Cover:

Provides a lump sum benefit in the event you suffer total and permanent disablement as defined by your policy. The benefit is usually paid if a medical practitioner deems you are not capable of returning to your previous occupation

Trauma Cover:

Often purchased with life cover, trauma insurance will provide a lump-sum benefit if you suffer a serious medical condition such as stroke, cancer or heart attack. Some policies will cover up to 50 different conditions

  • Yes - I have supplementary cover from other insurance policies to help me cope

While most Australian’s have some sort of cover in their Superannuation Fund, Health Insurance or WorkCover policy. What most people don’t know, is the default cover provided is usually only a portion of what they will actually require in the event of death, serious illness or injury (sometimes as little as 20%).

If you're not sure about whether the cover provided by your employer or super fund is enough, it may be worthwhile to find out exactly what you stand to receive in the event of a claim and comparing this to what you actually require. An insurance consultant can also help you review your policy.

Compare Life insurance quotes from these direct brands

Name Product Maximum cover Maximum Entry Age Minimum Sum Insured Guaranteed Future Insurability Expiry Age Short Description
Get a quote for up to $15 million in life insurance cover. Cover can be tailored to meet your personal needs. Plus, get your first month free. T&C’s apply.
No expiry age as long as premiums are paid
Get a refund of 10% of the premiums you've paid (in the first 12 months) with The Real Reward™.
No expiry age as long as premiums are paid
Get life cover up to $1.5 million. Plus, ahm health members can save 10% off premiums.
Receive a 10% discount on the second person when two applications are submitted at the same time, and both policies are issued.
No expiry age as long as premiums are paid
Cover up to $1.5 million with Guardian Life Insurance.
Protect what matters with a new Virgin Life Insurance policy. If eligible, you can earn 25,000 Velocity Points. Ends 1 July 2019. Min $80/month, min. 6 month policy to earn Points.
Get flexible life insurance up to the sum of $2,000,000.

Compare up to 4 providers

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Coverage is the amount of money that you will be paid in the event of a claim. An insurance consultant can help you determine an appropriate amount. Calculator
Provides a lump sum payment if you become totally and permanently disabled and are unable to return to work.
Provides a lump sum payment if you suffer a serious medical condition. Cover can be taken out for 40-60 medical conditions depending on the policy you choose.
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