Updates

Life Insurance: How Much is Enough, and Why Advice Matters

How much life insurance is enough—and do you really have the right cover in place? With underinsurance a growing issue in Australia, we explore the different types of life cover, how to determine what you actually need, and why trusted financial advice makes all the difference.

When it comes to protecting your loved ones and lifestyle, life insurance is one of the most important decisions you’ll make. And yet, many Australians remain underinsured, leaving themselves and their families financially vulnerable.

At Sherlock Wealth, life insurance has been at the heart of what we do since 1970. Over the decades, we’ve helped protect thousands of lives and lifestyles, overseeing billions in cover and supporting clients through tens of millions in successful claims.

As CEO Andrew Sherlock explains:

“Life insurance is not just about preparing for the worst. It’s about giving people peace of mind—knowing that no matter what happens, they’ve taken care of what matters most.”

Understanding the Different Types of Insurance

There’s no one-size-fits-all approach to life insurance. The right cover depends on your stage of life, financial commitments, and family circumstances. Here’s a quick overview of the main types of insurance cover:

Life Cover: Pays a lump sum to your beneficiaries if you pass away or are diagnosed with a terminal illness.
Total and Permanent Disability (TPD): Provides a payout if you become permanently disabled and unable to work.
Income Protection: Replaces a portion of your income if you’re unable to work due to illness or injury.
Trauma (Critical Illness) Cover: Pays a lump sum if you’re diagnosed with a serious illness such as cancer, heart disease, or stroke.

Each plays a different role in creating a safety net around your income, your family, and your long-term financial goals.

The Underinsurance Problem in Australia

According to ClearView’s insights, Australia faces a growing underinsurance gap, with many households holding insufficient cover, particularly for income protection and TPD. While 95% of Australians consider life insurance important, fewer than half actually have it in place.

This gap is often driven by misconceptions about cost, a lack of understanding about what’s needed, or the assumption that default cover through super is “enough.”

But the reality is this: without the right cover, even a short-term illness or injury can have long-term financial consequences.

How Much Cover is Enough?

Determining the right level of cover means thinking beyond just today’s expenses. You’ll need to consider:

Mortgage and debt repayments
School fees or future education costs
Ongoing living expenses for your family
Lost income and future savings potential
Medical or care costs if illness or disability arises

The ideal cover is tailored to your life—ensuring that your family’s lifestyle, plans, and financial stability can continue uninterrupted, even if the unexpected happens.

The Value of Professional Advice

Understanding your insurance needs and choosing the right policy can be complex. That’s where working with a trusted adviser makes all the difference.

At Sherlock Wealth, we take the time to understand your circumstances, model different scenarios, and help you make informed decisions with clarity and confidence.

As one of our clients, Mark Worrall, shared:

“Without Andrew’s detailed knowledge of my insurance arrangements, I wouldn’t have known I had a right to claim when I became ill. Not only had Sherlock Wealth recommended the right insurances for me, but they also recognised my right to make a claim, which I didn’t know I had. They also assisted in making the claim and the payment I received from that has been life changing.”

This kind of support is what makes advice not just valuable, but essential.

Final Thoughts

Life insurance is a crucial part of any financial strategy—but it’s only effective if it’s set up properly, reviewed regularly, and tailored to your needs.

If it’s been a while since you reviewed your cover—or if you’re unsure where to start—we’re here to help.

Start the conversation today: Contact the Sherlock Wealth team

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