Insurances you actually need as a dad

I was sitting at a kitchen table in Brisbane with a financial adviser two years ago, a brochure spread between us, and he was walking me through a $14,000-a-year insurance package that would "protect everything." I let him talk for forty minutes. Then I asked him to circle the parts that would still matter if I died next Tuesday. He circled about a third of the diagram. The rest was margin for him. I cancelled the meeting and went home and rebuilt the policies myself, and the version I ended up with cost less than half and covered the things that actually mattered.

This is the breakdown I wish I had been handed at 35, when I had a baby and a mortgage and no idea what the difference between TPD and trauma was. It is written for an Australian man with kids, a mortgage, and a regular income. The principles travel; the specific products and tax treatment are AU 2026.

The three that matter

Three insurances actually do the job they are sold to do, for most fathers, most of the time.

• Term life insurance. Pays a lump sum to your dependants if you die. Term, not whole-of-life. Whole-of-life policies bundle insurance with an investment component, charge enormous fees, and historically deliver returns far below an index fund alongside life cover that is harder to compare. Term is clean: you pay an annual premium, you are covered for a defined period (typically renewable to age 70), and the price reflects the actuarial risk. Cover amount: 10 to 12 times annual income, plus the mortgage balance, minus existing assets. For a 42-year-old earning $150,000 with a $400,000 mortgage and $200,000 in super, somewhere between $1.5 million and $1.8 million is in the right range.
• Total and Permanent Disability (TPD). Pays a lump sum if you become permanently unable to work in your usual occupation. The "own occupation" definition matters and costs more than the "any occupation" definition; for most professional men with specialised careers, own occupation is the right pick. Cover amount: enough to clear the mortgage and replace 5 to 10 years of income, because permanent disability often comes with extra costs (modifications, care, reduced household productivity from your spouse).
• Income protection. Pays a monthly benefit (typically 70 to 75 percent of income) if illness or injury keeps you out of work for longer than the waiting period. The most overlooked and arguably the most important insurance for a working father. Statistically, you are far more likely to be off work for 6 months with a back injury or a cancer diagnosis than to die before retirement. Income protection covers the gap that life insurance and TPD do not.

These three together form the skeleton. Everything else is accessories or fraud.

The two situational ones

• Private health insurance. Whether you need it depends on your income, your tolerance for the public system, and your specific health risks. The maths: at incomes above the Medicare Levy Surcharge threshold ($97,000 single, $194,000 family in 2026), the surcharge is 1 to 1.5 percent of taxable income, which is roughly the cost of a basic hospital cover policy. So you are paying the money either way; the only question is whether you get private cover for it. Add the Lifetime Health Cover loading (2 percent per year past 31, up to 70 percent) which compounds permanently if you delay, and the calculation often tips towards holding a policy from your early thirties even if you do not use it much. Extras (dental, optical, physio) are usually a bad deal; if you are paying $1,800 a year for $1,200 of services, the insurer is winning. Hospital cover only, basic tier, is the minimum sensible position.
• Trauma cover. Pays a lump sum on diagnosis of a defined critical illness (heart attack, cancer, stroke, etc). The argument for it is that recovery from a major illness includes costs that income protection does not cover (alternative treatments, lifestyle changes, time with family). The argument against is that the premiums are high, the definitions are tight (many real-world diagnoses do not meet the policy's criteria), and most of what trauma cover provides is duplicated by a properly sized emergency fund plus income protection. For most fathers I would skip trauma. The exception is a family history of early-onset cancer or cardiac events, where the maths starts to favour the policy.

The one that is a confidence trick

Funeral insurance. The product is mathematically indefensible for almost everyone who buys it. Premiums escalate with age, often exceeding the eventual benefit if you live to a normal life expectancy. The advertised "fixed" benefit is often eroded by inflation between purchase and payout. The same outcome (a few thousand dollars available for funeral costs) is achievable through a small term life policy or through holding $15,000 in a savings account with a transfer-on-death instruction.

If a salesman is calling your dad about funeral insurance, hang up the phone for him. The product exists because elderly Australians are an easy mark for guilt-based marketing. There is no scenario where it is the right answer.

The super-fund default versus standalone

Most Australian super funds bundle default life insurance and TPD into your account, and many include income protection. The cover is cheap because it is group-rated. The premiums come out of your super balance, which feels painless because you do not see the money leave your bank account.

The advantages of super-fund insurance:

• Cheap. Group rates significantly under standalone retail.
• Automatic. No medical underwriting at low cover levels.
• Tax-effective. Premiums for income protection inside super are paid pre-tax, effectively giving you a 15 percent discount versus paying personally.

The disadvantages, which matter more than people realise:

• Cover levels are often inadequate. Default cover for a 42-year-old might be $250,000, when the appropriate amount is $1.5 million.
• Definitions can be looser. "Any occupation" TPD is more common in default products. A pilot who damages an eye and can no longer fly is "any-occ" employable but cannot work in his career.
• Insurance erodes the super balance. $1,500 a year coming out of super for 25 years compounds to a meaningful retirement shortfall.
• Stapling rules and fund changes can leave you uninsured at the wrong moment if you do not check.

The right pattern for most fathers I know:

• Hold the super-fund default cover as a baseline floor. Do not cancel it.
• Top up to appropriate levels with a standalone retail policy outside super. Pay personally.
• Hold income protection inside super for the tax effectiveness, with a top-up policy outside if your cover is capped below your actual income.

The numbers, for a worked example

Take a 42-year-old man earning $160,000, mortgage of $450,000, two kids aged 6 and 9, working spouse on $90,000.

Appropriate cover:

• Term life: $1.7 million ($160k x 10 + $450k mortgage minus $200k super)
• TPD: $1.4 million (own-occupation definition)
• Income protection: 75 percent of income to age 65, 30-day waiting period, indexed for inflation
• Private hospital cover: basic tier, no extras
• Trauma: skip unless family history

Estimated annual premiums (mid-2026 rates, healthy non-smoker):

• Term life $1.7m: $850 to $1,200
• TPD $1.4m own-occ: $1,400 to $1,900
• Income protection $120k benefit, to age 65, 30-day wait: $2,800 to $3,800 (this is the big one)
• Hospital cover, basic, single: $1,800 to $2,200
• Total: roughly $6,800 to $9,100 a year

That is a real number. It is also less than half of what the kitchen-table adviser tried to sell me, and it covers the things that actually matter.

The annual review

Insurance is not a "set and forget" product. The right cover at 35 is wrong at 45. Premiums rise with age. Definitions in the market shift. Family situations change.

Review annually. Every year, on a fixed date, sit down for an hour and check:

• Does the cover amount still match income, mortgage balance, and dependants?
• Have premiums risen sharply? If so, get fresh quotes from competitors.
• Has your job changed? Some occupations are "white collar" and cheaper to insure than the loading on "blue collar" or "hazardous."
• Is the income-protection waiting period still right? Longer waits drop premiums significantly.

REVIEW THE COVER EVERY YEAR. Not "in principle, when I get around to it." Every year, on a date in the calendar.

The bullet summary

• Term life. Yes. 10 to 12 times income plus mortgage.
• TPD. Yes. Own-occupation if available.
• Income protection. Yes. The most overlooked.
• Private hospital. Usually yes, depending on income and Lifetime Health Cover loading.
• Trauma. Mostly no.
• Funeral. No.
• Whole-of-life. No.
• Mix super-fund default with standalone top-up.

The job of insurance is to keep the household running on the worst day of your decade. Buy that, and not a dollar more.

Cover the basics. Skip the theatre. Sleep better.