How the life insurance calculator works
Moneysmart's approach is a subtraction. First add up what your family would need: the mortgage, credit cards and other debts, childcare, school fees and ongoing living costs. Then add up what they would receive: super, savings, investments that could be sold, your paid leave balance and support from family. The difference is the amount of cover to get.
The calculator works out two numbers from the same inputs. Life cover uses the years your family would need support if you died, plus funeral and one-off costs. TPD cover uses the years until you planned to retire, plus medical, rehabilitation and home modification costs, because you would still be alive and need care. Moneysmart's own life insurance calculatorhandles life cover only and adds its own default assumptions.
What to include in what your family would need
- Debts to clear: the home loan, car and personal loans, and credit card balances.
- Living costs: what your income pays for each year, multiplied by the years your partner or children would rely on it.
- Future costs: childcare and school fees until the youngest is independent, and care for anyone who depends on you.
- One-off costs: Moneysmart puts funerals at $8,000 to around $20,000 (September 2026), plus legal and estate costs.
- For TPD: medical and rehabilitation costs, and changes to your home or car for accessibility.
What to count as already there
Count your super balance and any insurance already in it. Moneysmart says most super funds automatically give members aged 25 and over life cover and TPD, so check your fund's app or statement for the type and amount of cover before you buy more. Add savings and investments your family could sell, paid leave you're owed, and only the family support you can count on.
Cover you already hold counts against the gap, and holding cover in more than one fund can mean paying premiums twice for cover you may not be able to claim in full. Seelife insurance through superfor how default cover works and when it ends.
Why the TPD amount is worked out differently
A TPD claim means you're alive but unlikely ever to work again, so the money has to replace your income for the rest of your working life and pay for care. Moneysmart lists living expenses for you and your family, debts, medical and rehabilitation costs, and home or car changes, less private health insurance, any trauma or income protection cover, savings and family support. Moneysmart also warns that a TPD payout from super can be taxed at up to 22% if you're under 60, so the money you receive can be less than the cover amount. SeeTPD insurance for the definitions that decide a claim.
Allow for tax on cover held in super
Payouts from super follow super tax rules. The ATO says a death benefit paid as a lump sum to a dependant for tax purposes, such as a spouse or a child under 18, is tax-free. Paid to someone who isn't a dependant, such as an independent adult child, the taxable component is taxed at up to 15% plus the Medicare levy (taxed element) or up to 30% plus the Medicare levy (untaxed element). If most of your cover sits in super and an adult child is your likely beneficiary, allow a buffer. For TPD, the TPD payout calculatorestimates the tax on a lump sum from super.
Once you have a number
Use the same sum insured and premium structure on every quote so you're comparing like with like. Compare the definitions, exclusions and how premiums will rise as well as this year's price, and review the amount whenever your debts or dependants change. Many people reduce their cover as the mortgage falls and the children leave home. If you're in your 60s or 70s, see life insurance for over 60sfor what you can still buy, or term life insurancefor how cover and premiums work.
Common questions
How much life insurance do I need?
Enough to cover what your family would need if you died, less what they would already have. Add up debts to clear, the living costs your income pays for the years they'd need support, future costs such as school fees, and one-off costs such as a funeral. Then subtract your super, savings, cover you already hold and realistic family support. The gap is the cover to aim for.
Is 10 times your salary enough life insurance?
A multiple of salary is a rough rule of thumb that ignores your actual debts, dependants, savings and existing cover. Moneysmart's method works from your own figures instead, so two people on the same salary can need very different amounts.
How much TPD cover do I need?
Work it out the same way, but remember you'd still be alive and need looking after. Moneysmart lists living expenses for you and your family, debts, medical and rehabilitation costs and changes to your home or car. Subtract what you'd already have, such as savings and any income protection or trauma cover.
Should I count my super when working out life cover?
Yes. Your super balance, and any insurance already in it, would go to your beneficiaries as a death benefit. Check your fund statement for the default life and TPD cover it includes, because many people already hold some cover through super without realising.
Does the calculator allow for tax?
No. Payouts from super can be taxed: a TPD lump sum at up to 22% if you're under 60, and a death benefit paid to someone who isn't your dependant for tax purposes at up to 15% or 30% plus the Medicare levy on its taxable component. If most of your cover is in super, allow a buffer.
General information only
This calculator uses only the figures you enter and doesn't consider your objectives, financial situation or needs. It isn't a recommendation about any policy. Speak to a licensed financial adviser if you want personal advice about how much cover to hold.
