Life insurance calculator
Life insurance is considered the most common insurance policy to be held by an individual due to its simplicity and low cost compared to the alternative insurances available; if the insured dies or contracts a terminal illness, a lump sum benefit may be paid to assist with a variety of expenses such as clearing the mortgage, covering debts and providing for children's education (subject to individual circumstances and the sum insured).
However many Australians are underinsured or do not have life insurance at all; this is alarming considering the increasing debt levels amongst Australians.
Calculating your needs
You must take the following into consideration:
- your current level of debt,
- ongoing living expenses for your family,
- funeral costs,
- children's education expenses, and
- medical bills.
There are various formulae and online life insurance calculators that can be used and generally they take into account your age, the age of your dependants and your current income, lifestyle and debts, including a mortgage.
You may find this online calculator supported by LifeWise useful. However please note that this life insurance calculator will only give you an indication of how much cover you may need, and is not as comprehensive as speaking directly with an xLife adviser.
Life insurance for the homemaker
When considering life insurance for any non-income earning spouses, it is prudent to remember that generally a breadwinner will often only have two choices upon the death or disablement of a homemaker. They can choose to take leave from their own job to look after the household, or employ someone else to do it.
Both of these options require funds to cover the expenses involved, and both will have a negative impact on the household income even before accounting for the medical costs if the homemaker is critically ill or totally disabled.
How premiums are calculated
The cost of life insurance is paid by means of a regular premium. The cost of the premium is calculated based on life expectancy as well as the life insurance company's risk assessment of an individual. In simple terms, the older you are the higher the premiums will be. If you are a smoker or like to participate in hazardous activities, your premiums may also be higher due to the higher risk of dying.
The life insurance company also takes into consideration medical history.
The premium is generally indexed in accordance with the Consumer Price Index (CPI), or a formula based on the CPI. Therefore the cost of premiums usually increases throughout the duration of the policy even if paying a level premium.
Assistance in calculating your requirements
To ensure you don't miscalculate the levels of insurance you require please contact an xLife adviser who will be able to calculate the level of cover your family needs.
Exclusive Offer! Call xLife on 1300 135 205 today and
save up to 20% on your first year's life insurance premium.
December 2010
