How much cover do you need?

Seven things to consider when assessing your insurance needs

Up to 95% of Australians are underinsured*. Find out how to make sure you’re not one of them.

Working out how much cover you need against death, disability and illness doesn’t have to be difficult.

It simply involves working out what you already have, and what you would want or need if something happened to you. The difference between the two is likely to be the amount of cover you need.

We’ve provided a checklist of 7 things to consider when assessing your needs.

Checklist 

  1. What you have now
    What do you have now? Factor in the value of any savings, regular income streams and investment assets (eg superannuation, shares etc).
  2. Debts
    What debts do you have that you’d like paid off if something were to happen to you? Consider your mortgage if you have one, any investment or personal loans and any credit card debt.
  3. Ongoing financial obligations
    How much would you like to leave your loved ones to meet their future financial needs? If you have children, do you need to consider school fees? What future major purchases or expenses would you need to cater for? Consider things such as future renovations, general maintenance, and replacement of major appliances or motor vehicles.
  4. Childcare and home duties
    Have you thought about how your children would be cared for if you or your partner were no longer able to care for them? Many couples insure the main breadwinner but forget about the primary caregiver. A death or illness of the primary caregiver may mean that you would have to consider alternative childcare arrangements and domestic help that could significantly impact on your living costs.
  5. Living expenses
    If you became permanently disabled and were unable to work, how much would you need to maintain your lifestyle? You might want to allow for increased medical costs and home modifications.
  6. Timeframe
    If you became ill, how long would you be able to live without an income? The default waiting period for income protection cover through VicSuper is 90 days and the default benefit period is two years. You can apply to reduce the waiting period to 60 or 30 days, and increase the benefit period to five years or up to age 65. But be aware that increased premiums and underwriting apply.
  7. Funeral expenses
    No one wants to think about their funeral, but the reality is that they can be expensive, costing anywhere from around $4,000 to $14,000**. Neglecting to provide financially for a funeral places added strain on a family at an already very difficult time. Consider building funeral costs into your insurance needs.

Icon exclamation Ensure you’re always covered!

Reassess your insurance needs from time to time to ensure your cover is adequate as your life changes.


Get expert advice

VicSuper offers an advice service to members who’d like some help working out their insurance needs, superannuation strategies or retirement planning.

Advice is provided by qualified financial planners and is offered without obligation, and in most cases, at no additional cost. Find out more about our advice service.

* Kelly, S. & Vu, Q.N., 2010, The Lifewise/ NATSEM Underinsurance Report, Understanding the social and economic cost of underinsurance (PDF)

** https://www.moneysmart.gov.au/life-events-and-you/over-55s/paying-for-your-funeral

Seven things to consider when assessing your insurance needs

Up to 95% of Australians are underinsured*. Find out how to make sure you’re not one of them.

Working out how much cover you need against death, disability and illness doesn’t have to be difficult.

It simply involves working out what you already have, and what you would want or need if something happened to you. The difference between the two is likely to be the amount of cover you need.

We’ve provided a checklist of 7 things to consider when assessing your needs.

Checklist 

  1. What you have now
    What do you have now? Factor in the value of any savings, regular income streams and investment assets (eg superannuation, shares etc).
  2. Debts
    What debts do you have that you’d like paid off if something were to happen to you? Consider your mortgage if you have one, any investment or personal loans and any credit card debt.
  3. Ongoing financial obligations
    How much would you like to leave your loved ones to meet their future financial needs? If you have children, do you need to consider school fees? What future major purchases or expenses would you need to cater for? Consider things such as future renovations, general maintenance, and replacement of major appliances or motor vehicles.
  4. Childcare and home duties
    Have you thought about how your children would be cared for if you or your partner were no longer able to care for them? Many couples insure the main breadwinner but forget about the primary caregiver. A death or illness of the primary caregiver may mean that you would have to consider alternative childcare arrangements and domestic help that could significantly impact on your living costs.
  5. Living expenses
    If you became permanently disabled and were unable to work, how much would you need to maintain your lifestyle? You might want to allow for increased medical costs and home modifications.
  6. Timeframe
    If you became ill, how long would you be able to live without an income? The default waiting period for income protection cover through VicSuper is 90 days and the default benefit period is two years. You can apply to reduce the waiting period to 60 or 30 days, and increase the benefit period to five years or up to age 65. But be aware that increased premiums and underwriting apply.
  7. Funeral expenses
    No one wants to think about their funeral, but the reality is that they can be expensive, costing anywhere from around $4,000 to $14,000**. Neglecting to provide financially for a funeral places added strain on a family at an already very difficult time. Consider building funeral costs into your insurance needs.

Icon exclamation Ensure you’re always covered!

Reassess your insurance needs from time to time to ensure your cover is adequate as your life changes.


Get expert advice

VicSuper offers an advice service to members who’d like some help working out their insurance needs, superannuation strategies or retirement planning.

Advice is provided by qualified financial planners and is offered without obligation, and in most cases, at no additional cost. Find out more about our advice service.

* Kelly, S. & Vu, Q.N., 2010, The Lifewise/ NATSEM Underinsurance Report, Understanding the social and economic cost of underinsurance (PDF)

** https://www.moneysmart.gov.au/life-events-and-you/over-55s/paying-for-your-funeral