The Finance Algorithm

Life Insurance Calculator

Estimate how much life cover your family would need from your income, debts, dependants and education goals, less the cover you already hold.

Updated October 2026Built and checked by MaverickHow it's calculatedReport an error

Your numbers

Updates as you type
$
$110k

Your gross annual income that your family depends on

15y

How long your family would need financial support, typically until kids are independent

$
$500k

All debts that would need to be cleared

Children or family members who depend on your income

$
$50k

Estimated cost per child for private school or university

$
$200k

Any existing cover through super, employer, or other policies

$
$15k

Moneysmart puts funeral costs at $6,000 to $18,000

The button asks our AI to explain these figures in words.

Life insurance needs

Estimated need

$2,265,000

before existing cover

Cover gap

$2,065,000

existing $200,000

Income replacement

$1,650,000

15 years of income

Income multiple

20.6x

of annual income

What the cover is for

The DIME formula: Debts + Income replacement + Mortgage + Education. Plus funeral/final expenses.

$2,265,000total need
Income replacement72.8%
Debt clearance22.1%
Education fund4.4%
Funeral / final0.7%

Estimated need vs existing cover

Your super statement shows any default death cover. Default cover is set by the fund, not by your family's needs.

$2,265,000Estimated need$200,000Existing cover

Total cover at different income replacement periods

A common choice is the years until your youngest child is independent or your partner retires.

$1,165,0005yr$1,715,00010yr$2,265,00015yr$2,815,00020yr$3,365,00025yr
This is a need, not a price. Premiums depend on your age, health, smoking status, occupation and the insurer, so only a quote gives one. Cover held in super is paid from your super balance, which reduces what you retire with. Savings, super and other assets your family could draw on also reduce the cover needed.

How it works

How much life insurance do you need? Moneysmart frames it as a gap: what your family would need (income for some years, the mortgage and other debts, education, a funeral) less what they would already have, including cover you already hold. Cover through super is set at a default level by the fund, which may not match what your family would need. This calculator adds up the need from your own figures; it doesn't price cover, because premiums depend on the insurer's assessment of you.

  1. 1Enter your annual income and how many years your family would need it replaced.
  2. 2Add your total debts (mortgage, loans, credit cards).
  3. 3Select the number of dependants.
  4. 4Optionally add education funding goals per child.
  5. 5Enter any existing life cover (check your super statement!).
  6. 6See your estimated need and the gap to the cover you hold.

Worked examples

Young Family, Mortgage

Sarah, 35, earns $110,000. Mortgage: $500,000. Two kids (ages 3 and 5). Wants 15 years of income replacement and $50,000 education fund per child. Has $200,000 default cover in super.

Income replacement: $110,000 × 15 = $1,650,000. Mortgage: $500,000. Education: 2 × $50,000 = $100,000. Funeral: $15,000. Total need: $2,265,000. Less existing cover: $200,000. Cover gap: $2,065,000. The premium for that depends on Sarah's health and the insurer, so quotes are the next step.

Single, No Dependants

Tom, 28, single, no kids. Rents. Has $20,000 in savings and minimal debt.

With no dependants, Tom's life insurance need is small: funeral costs ($15,000) and any debts. If he plans a family later, his need will grow then. Insurers assess health when you apply, so a condition that develops before then can mean exclusions or higher premiums.

Questions people ask

Should I get life insurance through super or separately?
Through super: often cheaper and easier to get, but premiums reduce your retirement balance and the default cover may not match your needs. You can usually increase it through the fund. Separate policy: premiums come from your take-home pay, and you choose the insurer, the amount and the definitions. Some people hold base cover in super and top up separately. Moneysmart suggests comparing the cover, cost and rules of both.
What's the difference between stepped and level premiums?
Insurers now call them variable age-stepped premiums (formerly stepped) and variable premiums (formerly level). Age-stepped premiums are recalculated at each renewal and rise as you age. Variable premiums start higher, and later increases aren't based on your age, so they rise more slowly. Which costs less overall depends on how long you keep the cover.
Can I get life insurance if I have a pre-existing condition?
Often, but premiums may be higher or the condition may be excluded. Conditions like high blood pressure, diabetes or a history of mental illness don't automatically disqualify you, and each insurer assesses them differently. Default cover in super usually doesn't require health questions, though it can exclude conditions you had before joining.

The terms, in plain English

Life Insurance (Death Cover)
Pays a lump sum to your beneficiaries when you die. Used to replace income, pay off debts, and fund future goals like children's education.
Sum Insured
The total amount of cover (lump sum) that will be paid out. This is what you're calculating: how much cover you need.
Variable Age-Stepped Premiums
Formerly called stepped premiums. Recalculated at each renewal based on your age, so they rise as you get older.
Variable Premiums
Formerly called level premiums. Higher at the start, and later changes aren't based on your age, so they generally rise more slowly than age-stepped premiums.

Official sources

Income Protection Calculator

Protect your income if you're injured or ill (covers living expenses, not just death).

TPD Insurance Calculator

Calculate Total & Permanent Disability cover if you can never work again.

Insurance Through Super Calculator

What the premiums on cover in super cost your retirement balance.