Calculating how much and what type of life insurance you need can be daunting. Here are five things to think about so you can feel confident that your life insurance will protect you and your family should the unexpected happen.

1. Your mortgage or legal probate

If you leave the family home to your partner, spouse or children, they will also inherit whatever mortgage repayments are left. That’s why it makes sense to take out enough Life Cover insurance to cover mortgage repayments, so that the family can stay in the home if you pass away.

List your chosen beneficiaries of the payout on your life insurance policy – or at least, state clearly in your will who you want to receive your life insurance benefit. If you don’t, it may be considered part of your estate (all your assets). This means they may not receive the full amount of your insurance payout.

Before the executor of your will can distribute your estate, they need to get probate, or legal authority, to do so. During the probate process other people, such as other relatives or any creditors you may have, can contest the will.

2. Funeral expenses

Funeral costs range from about $4,000 to $15,000. Including the cost of your funeral in your calculations means you could cover your funeral expenses yourself – and avoid having to save for them or leave them for your grieving family to cover.

3. Medical and caring costs

More than half of all Australians have private health insurance – but even with this cover you may be out of pocket for some of your medical bills. If you become totally and permanently disabled, the expenses of adjusting to your new lifestyle will likely be considerable.

Here are some insurance options that could help:

Total and Permanent Disability (TPD) or Critical Illness cover offer a payout (benefit) if you become disabled, injured, or severely ill.

If you have Income Protection cover (particularly with a benefit payable to age 65), this benefit may be able to help provide for cost of living and mortgage expenses should you have a long-term disability or severe critical illness.

MLC Life Insurance also offers Infection insurance to medical professionals, which offers a one-off payment if you acquire HIV, Hepatitis B or Hepatitis C while at work.

4. Your children’s education

Another cost that your life insurance could cover is your children’s education. Remember, your children’s school fees will increase over time. Calculate how much you expect their schooling will cost up to Year 12, and don’t forget to factor in inflation (CPI) if relevant.

5. Debts and income replacement

List your income, assets, expenses and liabilities to understand what your Income Protection needs to cover. This also helps with calculating how much Life Cover your family might need if you were longer around.

Are you self-employed or a small business owner? Business Expense cover will reimburse you for certain business expenses if you are temporarily totally disabled.

The percentage of your current income that your insurance can cover will affect the cost of your premiums. In general, the higher the amount of cover, the more expensive your premiums will be.

We’re here to help

If you have any questions about your policy, you can get in touch with us on 13 65 25 Monday to Friday 8.30am to 6pm (AEST/AEDT). Alternatively, if you’re looking to discuss your insurance needs in the context of your personal situation, please speak with your financial adviser.