Calculator Purpose, Assumptions & Methodology

Purpose

Our calculator is designed to help you estimate potential costs that different life cover policies including life, trauma, total and permanent disability (TPD), and income protection might help you cover. It uses a standard algorithm and only the information you provide. It does not capture every detail of your personal financial situation.

The output is meant to serve as a general guide, not a recommendation or definitive solution. You should not rely solely on these results when choosing an insurance amount.

Before making any decisions about insurance, consider obtaining tailored advice from a qualified financial adviser, and always review the relevant Product Disclosure Statement to ensure the policy fits your needs.

Methodology & Key Assumptions

Here is how Risk Researcher arrives at its estimates:

1. Income Protection

• What it is: Income protection provides a monthly payment in case illness or injury prevents you from working.

• Calculation: The monthly benefit is estimated as 70% of your annual income divided by 12, subject to a maximum cap.

• Income replacement ratio: We assume you aim to replace up to 70% of your pre-tax income, because many standard policies allow that level, though you may choose a lower ratio.

• Maximum monthly amount: We cap the benefit at a maximum monthly figure (for example, $20,000) to reflect the limits many insurers place on large claims.

2. Life Cover & Total Permanent Disability (TPD)

• What Life Cover is: A lump sum paid in the event of death or terminal illness.

• What Total Permanent Disability (TPD)is: A lump sum paid if you become permanently disabled and unable to ever return to work.

• Estimation method:

  • Outstanding mortgage(s)

  • Other financial liabilities (e.g. personal debts)

  • Income * 50% * 3 years — an allowance to help with living costs for a period after the event

  • Cost of raising children until reaching adulthood

  • A fixed sum for immediate costs (for example, funeral or emergency expenses)

• Children cost assumptions: We assume responsibility for raising children up to about age 19, using indexed estimated costs that rise with inflation.

• Immediate out of pocket costs: A fixed amount is included to cover expenses such as funeral costs, urgent medical expenses or legal fees.

3. Trauma (Critical Illness)

• What it covers: A lump sum for certain severe illnesses or injuries as defined in the policy.

• Estimation method:

  • A baseline amount for out of pocket medical costs (treatments, hospital stays, specialists etc.)

  • Income * 2 years

• The baseline medical cost is estimated using recent data (inflated from earlier published reports) to reflect what severe illness care might cost today.

Limitations & What’s Not Included

• The calculator does not guarantee that the cover amounts estimated would be available to you under an insurer’s actual policy; real limitations can come from your age, job risk, health, etc.

• Other relevant financial items are not included in the calculation, such as:

  • Savings, investment assets, or existing insurance

  • Spousal or partner income

  • Equity in property

  • Taxes or levies that might affect the net benefit

• Assumes “today’s dollars” (i.e. it doesn’t model inflation’s effect on future costs) though many policies offer inflation-indexing features.

• Does not account for every personal nuance, this is a tool to help with planning, not a substitute for professional advice.

Disclaimer

• Results are estimates only, based on the limited inputs you provide.

• This does not constitute personal financial advice. It does not take into account your personal objectives, situation, or needs.

• Always read the Product Disclosure Statement of any policy you are considering to check if it meets your requirements.

• As circumstances change over time (family, income, debts, etc.), it is good practice to review your insurance cover periodically.