Which Level of Insurance Cover Do I Need?

Determining how much insurance you need requires you to think about what debts you’d like to pay off and how much money your family needs if you were to die (remember your debts won’t die with you).

Here is a simpler way  to look at this is:


The main questions to ask yourself are:

  • How much money would my family require when considering they need to pay off all debts, such as mortgage, credit cards or personal loans?
  • How much money would my family require after my death to pay for immediate expenses, such as funeral expenses and unpaid medical bills?
  • How much money would my family require after my death to preserve their standard of living in the distant future?

How much Income Protection Insurance (Also called ‘Disability Income or ‘Salary Continuance Insurance’) is enough? 

Most income protection policies are able to protect you with insurance cover for possibly up to 75% of your gross income. This is generally enough to cover the immediate costs of living. Otherwise, you have the choice to reduce your premium cost by taking out a lower level of cover that costs less and insures less. It is possible that it is be more preferable to insure yourself for less than 75% of your current income and pay less premium, especially in the case of whether you want to be taking out some income protection or none at all. If this sounds like you, you can start by working out what your yearly budget is.68687c31-61c4-432e-a4ad-e8e5abd8b797

Once you have a good or accurate estimate of your yearly budget, you can use this information to form the basis of your sum insured. It is good to keep in mind that your premium is tax deductible, but don’t forget that there may be taxation on your income.

How much Total and Permanent Disability insurance is enough?

There isn’t a set regulation for determining your Total and Permanent Disability Insurance needs. You should bear in mind that Total and Permanent Disability insurance is usually an inexpensive extension to Life Insurance and therefore it is usually set at the same amount. However, it is good to consider how much extra insurance you would need to maintain your way of living if you ever became disabled.

The main questions you should ask yourself are:

  • Would I need to fund my lifestyle and retirement indefinitely with a regular income stream? How much would I need to be provided with in the form of a lump sum to produce that income stream?
  • Would I need to cover any extra costs such as treatment and rehabilitation?
  • Would I need to change or adjust my house in any way to make my life easier?

After all these questions have been answered, you would have a much better idea on assessing whether you have the right amount of cover.

How much Trauma insurance is enough?

  • Trauma Insurance is designed to keep your life on track in case you have come down with a sudden, debilitating illness, many policies give you the choice of setting your own levels of cover, which makes it worth thinking about how much cover you need.

What can Naritas do?

Professional assistance is available from our friendly staff. Simply give us a call at 1300 558 887 or access us via live chat.