This basic tool is designed to help you determine your required level of risk insurance but before you use it, it's important that you recognise that the suggestions it provides do not consider your personal needs and circumstances. This means that the suggested levels of cover may not be appropriate for you or your family. This calculator may help you decide what insurance you need and is for illustration purposes only. We strongly recommend that you get personal financial advice from an insurance specialist rather than rely, or make decisions, on our general assessment.
Information on finder.com.au and the services we provide is covered in our Terms and Conditions. If you require information on the assumptions we've made and built into our calculator click here.
Total dollar amount required to insure users life
Term of the life insurance is variable (max cut off of 30 years)
Inflation rate is variable
Investment rate is variable
For the purpose of calculating cover the following limitations have been adopted user is aged between 19-54
No allowance has been made for any taxation or levies as this will depend on your personal circumstances.
A real investment return of 2% p.a., relative to AWOTE, is used to capitalise future expenses. That is, a 2% real return is used to convert required income streams to lump sums. This real return is broadly based on an assumed rate of AWOTE inflation of 4%p.a. and net investment return of 6% p.a.
The AWOTE assumption of 4% p.a. is 1.5% p.a. higher than the midpoint of the Reserve Bank of Australia's target range for CPI inflation of 2%-3% p.a. An untaxed return of 6% p.a from conservatively invested funds is consistent with long term historical returns and may be an appropriate investment in some circumstances.
The actual real return could vary substantially from this both because of the inherent volatility in wage inflation and investment returns and because of its dependence on the investment strategy adopted and the taxation status of the investment.
Accordingly, if the capitalised future expenses component of the derived sum insured is a significant proportion of the total, then the user should seek advice as to a more appropriate after-tax real investment return to use.
The total values are the sum of expenses entered within the calculator.
No allowance has been made for any income received. It is only a calculation of the expenses entered.