By Philippa Billings, Chief Advice Officer, Otivo
Life insurance is one of the few things you buy hoping never to use, which makes it easy to put off or dismiss. But the question of whether you need it isn't really about you, it's about the people who'd be left to manage financially without your income. That shift in perspective is where the answer usually becomes clear. Here's how to think about whether life insurance is for you.
Quick answer
Whether you need life insurance depends on who relies on your income. If others, such as a partner, children or dependants, would face financial hardship without you, life insurance can provide a lump sum to help cover debts and living costs. As at July 2026, people with no dependants and few debts may have less need for it.
What does life insurance actually do?
Life insurance pays a lump sum to your nominated beneficiaries if you die, and often if you're diagnosed with a terminal illness. The purpose is to replace the financial support your income provided, so the people who depend on you aren't left struggling with debts and living costs on top of their loss. It doesn't benefit you directly, it's cover taken out for the sake of the people you'd leave behind, which is the lens that makes the need clear or not.
Who typically needs life insurance?
The clearest case is anyone with people who depend on their income. A parent whose family relies on their earnings, a partner in a household that couldn't cover the mortgage alone, or anyone carrying significant debts that others would be left to manage. For a single-income family in particular, the loss of that income can be financially devastating, which is exactly the risk life insurance is designed to cover.
Who might not need it?
If nobody relies on your income and you have few debts, the case is weaker. Someone single with no dependants, no mortgage and enough assets to cover their own final expenses may have little need for life insurance, since there's no one who'd face hardship without their income. Needs also change over time, so cover that made sense at one stage of life may be less necessary at another, and vice versa.
How do you decide if you need it?
Two questions cut to it. Would anyone face genuine financial hardship without your income, and what exactly would need covering, debts, living costs, or future expenses like raising children. If the answers point to real hardship for people who depend on you, life insurance is worth serious consideration. If they don't, the need may be limited. Framing it around who would struggle, rather than around yourself, is what makes the decision clearer.
Do you already have some through super?
Quite possibly, and it's worth checking before deciding. Many Australians hold a default level of life cover inside their super without having actively arranged it, so you may already have some protection in place. Whether that default amount is enough for your situation is a separate question, but knowing what you already hold is the starting point for working out whether you need more.
Frequently asked questions
Do I need life insurance if I'm single with no kids?
Often the need is lower, since no one relies on your income. It can still be worth considering if you have debts that others would be left to manage or anyone who depends on you financially, but many people in this position have less need for it.
Do I need life insurance if I have a mortgage?
It's worth considering if others rely on your income to cover that mortgage, since life insurance can provide a lump sum to help clear it. If you could not service the loan without your income, the risk to your household is real.
Do I already have life insurance through my super?
Many people hold default life cover inside their super without having arranged it directly. It's worth checking your fund, both to see what you have and to judge whether the amount suits your circumstances.
Where to from here
Whether you need life insurance comes down to who would struggle without your income. Otivo, a licensed Australian financial advice platform holding AFSL and Australian Credit Licence No. 485665, offers a personal insurance inside super module that helps you understand how much personal insurance you might need, based on your dependants, debts, income, age and existing cover. It turns a difficult question into a clear one.
Sources
- ASIC MoneySmart — life insurance and who needs it — moneysmart.gov.au
Disclaimer
The information in this communication is current as at July 2026 and has been prepared by Otivo Pty Ltd ABN 47 602 457 732, AFSL and Australian Credit Licence No. 485665. This content is general information only and has been prepared without taking into account your objectives, financial situation or needs. It is not personal financial or taxation advice and should not be relied on as such. Before acting on any information, you should consider its appropriateness having regard to your personal circumstances. This material must not be reproduced in whole or in part, or posted on any social media platform, without the prior written consent of Otivo Pty Ltd.