The general rule that most insurers suggest is to buy a policy that is seven to ten times the amount of your annual salary. That's a good ballpark figure, but if you really want to make sure your family is protected you'll want to consider a few things:
Current debts. How much do you owe on the mortgage? On the car, credit cards, other loans? Total up all of your debt. That is how much your life insurance will have to pay to eliminate debt as a source of stress on your family after you're gone.
Burial costs. The typical Australian funeral costs up to $7,000 and the price keeps going up. Make sure you include at least this amount when deciding how much insurance to buy.
Cost of living. Being out of debt does not mean your family will have enough to survive on after your death. Consider the everyday costs of living: food, utilities, clothing, car repairs, etc. Do you have children? How much will it cost to see them to the end of their schooling, until they are grown and ready to handle life on their own? All of this should be considered in order to make sure your family is going to be able to make their way in the world without you.
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