Australia Life Insurance Calculator
Calculate how much life insurance cover you need in Australia using HLV and income-multiple methods. See stepped vs level premium projections inside and outside super.
Your Profile
Recommended Life Cover
Sum Insured
A$2.26M
Shortfall vs super default: A$2.08M
HLV Method
A$2.26M
12× Income
A$1.44M
Annual Premium
A$2,194
Monthly Premium
A$183
Stepped vs Level Premium Over Time
Age 40
A$2,518
Level: A$4,876
Age 45
A$4,160
Level: A$4,876
Age 50
A$6,787
Level: A$4,876
Age 55
A$11,166
Level: A$4,876
Age 60
A$17,953
Level: A$4,876
Age 65
A$28,462
Level: A$4,876
Tax Treatment
Premium paid from pre-tax super (fund claims 15% deduction). Death benefit paid to a SIS tax dependant (spouse, child under 18, financial dependant) is tax-free. To a non-tax dependant (adult child), the taxable component is taxed at up to 32% including Medicare (15% offset may apply to untaxed element).
How much life insurance do you need in Australia?
Most Australians are seriously under-insured. The default cover inside your super fund (typically $150k-$250k) sounds like a lot until you tally a mortgage of $600k, two kids, 20+ years of lost income, and final expenses. A proper Human Life Value (HLV) calculation usually points to $1.2M-$2M for a family breadwinner in their late 30s.
Inside super vs outside super
Life cover INSIDE super: premium paid from pre-tax super (the fund claims a 15% deduction), cheaper cash-flow, and the benefit is tax-free to a SIS tax dependant (spouse, minor child, financial dependant). Paid to a non-tax dependant (e.g., adult child), the taxable component attracts up to 32% tax (15% offset often applies). OUTSIDE super: premium paid from after-tax income (no deduction), but benefit is tax-free to any beneficiary — cleaner for estate planning where adult children are named.
Stepped vs level premiums
Stepped premiums rise sharply each year (often 8%-15% annually after age 45) because they re-price to your current age. Level premiums stay roughly flat but start 50%-80% higher at younger ages — insurers smooth the cost across the policy term. Level wins if you hold the policy past 15 years; stepped wins for short-duration cover (e.g., until mortgage cleared).
2026 premium benchmarks
$500k cover, non-smoker male, stepped, inside super: age 30 ~A$290/yr, age 40 ~A$575/yr, age 50 ~A$1,550/yr, age 60 ~A$4,100/yr. Smoker loading: +60%. Female lives often 10%-15% cheaper on life cover.
Common questions about Life Insurance
How much life insurance do I need in Australia?+
Use the Human Life Value (HLV) method: net income × years to replace (usually to retirement or until children are independent) + outstanding debts + final expenses + specific goals (e.g., university fees $60k-$120k per child). Subtract existing default cover through super and meaningful savings. A 38-year-old earning $120k gross with two kids and a $550k mortgage typically lands between A$1.2M-$2M.
Inside super vs outside super — which is better?+
Inside super: premium paid from pre-tax contributions (the fund claims a 15% deduction), gentler cash-flow. Benefit is tax-free to a SIS tax dependant (spouse, minor child, financially dependent adult). Paid to a non-tax dependant (e.g., independent adult child), the "taxable component" can attract up to 32% tax. Outside super: premium paid from after-tax income (no deduction), but the benefit is fully tax-free to any nominated beneficiary — cleaner for estate planning.
Stepped vs level premiums?+
Stepped premiums reset annually to your current age — cheap at 30, brutal at 55+. Level premiums stay roughly flat, pricing in future ages upfront — ~60-80% more expensive than stepped at 30, but cheaper overall if you keep the policy past 15 years. Use stepped for short-duration cover (e.g., only until the mortgage is cleared); use level for lifetime dependant protection.
Is my default super cover enough?+
Rarely. Default cover inside most industry super funds (AustralianSuper, HESTA, Hostplus) is typically $150k-$400k depending on age and occupation — designed as a minimum, not a household plan. A family with a mortgage and young children usually needs 3-6× the default cover. The calculator's "shortfall vs super default" output shows how much extra you need to arrange.
Are premiums tax deductible?+
Outside super: life insurance premiums are not personally tax deductible. Inside super: the fund gets a 15% deduction but you don't directly; it shows up as cheaper premiums. Exception: if you hold a life insurance policy inside a self-managed super fund (SMSF), specific rules apply. For income protection specifically, see the IP calculator FAQ — IP premiums outside super ARE deductible under Section 8-1 ITAA.
What is the tax on non-dependant life benefits?+
When life cover inside super pays to a non-tax-dependant (e.g., an adult child who isn't financially dependent), the "taxable component" is taxed at up to 32% (15% + Medicare) — sometimes higher with the untaxed element. Rule of thumb: if your likely beneficiary is not a tax dependant, strongly consider holding the policy OUTSIDE super to avoid the tax leakage.
Should I choose a life insurance bond or a term policy?+
Term life insurance (the subject of this calculator) pays a lump sum on death during the policy period and ends when the term expires or you stop paying — the most cost-effective risk protection. Life insurance "investment bonds" or whole-of-life policies bundle insurance with investment and are generally poor value versus pure term insurance + separate investing via low-cost ETFs inside super.