Prices Increasing Soon
The exact answer to ‘How much term insurance coverage do I need?’ depends on your individual needs, family’s requirements, inflation, loans, and more such factors. Determining the ideal cover amount for yourself ensures that your family is not underinsured and can meet their needs in your absence. This amount can help your family meet their future needs and manage inflation rates. Let us take a look at how much term insurance coverage you should buy to secure your family's financial future.
#All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply
By clicking on "View plans" you agree to our Privacy Policy and Terms of use
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
Term insurance coverage refers to the life cover (sum assured) which will be payable to the nominee in case of the policyholder’s unfortunate death during the policy term. In addition to this, it also includes additional rider benefit like accidental death benefit that can increase the payout provided to the family. To purchase the best term insurance plan for yourself, you need to ensure the life cover is enough to help your family maintain their current quality of life, pay off any loans, and are able to take care of their day-to-day expenses.
Term Plans
Let’s understand this with the help of an example:
Suppose Karan is 20 years old, and his current annual income is Rs. 10 Lakhs. In order to ensure that his loved ones are taken care of in his absence, he should consider a sum assured that is around 20 times your annual salary, i.e., Rs. 2 Crore. In case of his unforeseen demise during the policy tenure, his family members will be provided with a death benefit of Rs. 2 Crore.
In case he added a term rider along with the base sum assured of Rs. 2 Crores, such like accidental death benefit, his loved ones will also get an additional benefit with the sum assured.
To answer ‘How much term insurance do I need?’ you should understand that ideally, a term life insurance coverage should be at least 10 to 15 times your current annual income. However, apart from this general thumb ruler, there are the following factors you need to keep in mind when choosing the right term insurance cover amount.
You should tally up your family’s financial requirements to take care of their necessities, pay for housing, utility bills, groceries, transportation, and child’s fees along with other household needs.
You should assess your overall loans and debts like home, business, or student loans, and credit card debts, that may fall on your family’s shoulders in your absence.
Take into consideration any future goals and dreams you may have, like paying for your child’s higher education or their future wedding, funding their business endeavours or buying a home.
Your spouse may be left financially vulnerable in your absence. Therefore, ensure that the term insurance coverage amount that you choose is enough for your spouse to lead a financially independent life.
The amount of term insurance coverage you should get depends on your age. Your dependents and thus the amount of cover you opt for may change throughout your life with changing life stages. You should always reassess your existing policies and ensure that the cover amount is meeting your needs.
Following are the four methods that can help you compute how much term life cover you need:
This method determines the Human Life Value (HLV) or the economic value of an individual to the family. In this, your annual income, monthly expenses, outstanding loans and liabilities, and age are taken into consideration. This helps you decide the cover amount that you should opt for.
This method assumes that life insurance should substitute the lost savings of the sole earner. The easiest way to compute the income replacement value is Term Insurance cover = Existing yearly income X retirement years left.
This method is suggested by financial advisors, in which an individual is required to compute their daily household expenditures, debts, and objectives such as a child’s education, and also providing financial help to dependant parents for their whole lives.. The number you reach is the whole amount of money that your loved ones need. The other step is deducting your investments' current value and the cover you already have.
For computing the minimum term coverage, you require, you can go as per the common thumb rule of having a SA that is around 10X of your annualized income. Thus, if your present income is Rs. 10 lacs, you should opt for a life cover of at least 1 Crore.
Secure Your Family Future Today
₹1 CRORE
Term Plan Starting @
Get an online discount of upto 15%#
Compare 40+ plans from 15 Insurers
Here is a list of the factors you should take into consideration before calculating your ideal term insurance coverage amount.
Assess Your Monthly Expenses
assess all your expenses before determining the ideal life cover. This includes electricity and water bills, grocery bills, rent, fuel expenses, clothes, and all the other expenses.
Let’s say, the monthly expenses of Raju’s family are Rs. 50,000 which comes to around 7 Lakhs annually. It is generally suggested to provide coverage of 10-12 times of the yearly income. This is considered on the basis of higher inflation rates, increasing costs for his kids, and healthcare expenses for his parents. Raju’s coverage, at a multiple of 15 times, based on future house-related expenses, would be around 1 Crore.
Consider Your Financial Liabilities
Financial liabilities such as business-related loans, credit card bills, and home loans can fall on your family’s shoulders in case of your unfortunate death. Your family may find it difficult to manage household expenses and pay off the outstanding loans. Thus, in order to avoid these uncertain scenarios, you should choose a term insurance policy with large coverage that fulfills all your current liabilities.
Take Your Future Goals into Account
The most basic reason to purchase a term plan is to help your family maintain their current lifestyle in case of your unexpected death. This financial backup can help your family in achieving important future goals such as your child’s marriage or paying for their higher education, creating a retirement corpus for your spouse, or payoff any unexpected medical emergencies that may arise. Thus, the payout of your term insurance plan should support your family members to meet all your expenses.
Age
Age is one of the important factors in determining adequate term insurance plan coverage for you and your loved ones. For a young individual, a term life cover of 1 crore might be enough to cover their financial obligations like education or home loans, whereas, for an older individual who is married with kids, a 1 crore term insurance cover might not be enough to cover their financial needs. It is recommended to purchase a term plan at an early age because the premium of your term insurance increases with age.
Your Term Plan Tenure
You can have different responsibilities at different life stages. For example, at 25 years of years, you are possibly single with few responsibilities, and thus a policy term securing you till 60 years might be enough. But at 40 years of age, you are likely to have a spouse or a kid and thus might prefer purchasing a term plan with coverage for your whole life i.e., till 99/100 years of age.
Your Term Insurance Premiums
Always purchase a term plan that fits your budget, as then you would be less likely to miss premium payments due to insufficient funds. You can compare the premiums offered by different plans and insurers based on your needs online. You can also use a term insurance calculator to see the required premium amount for your desired life cover.
In case you are still wondering, “How much term insurance do I need,” here is a list of tips that can help you figure out the right sum assured for your term life insurance.
Add Riders to the Base Plan
Term riders are added to the base plan to enhance the plan's coverage. You can add any of these add-on riders by paying an extra amount along with the base premiums. There are several important term insurance riders available; Accidental Death Benefit Rider, Accidental Disability Benefit Rider, Critical Illness Rider, Hospicare Benefit Rider,and Waiver of Premium Benefit Rider.
Using Term Life Insurance Calculators
Term insurance calculator can help you compute the required premium for your desired life cover amount. You can also calculate the variation in premiums with the change in policy duration, life cover, and premium payment mode.
Buying Term plans online
Buying term plans online ensures you get the maximum discounts and lowest premium rates for your term life insurance. It is also easier to keep track of the plans online and pay your premiums timely from the comfort of your home.
You can calculate the term insurance coverage and buy the best term insurance plan in India by following the below-mentioned steps:
Step 1: Visit the term insurance calculator page
Step 2: Select your ideal sum assured and policy term and click on the right gender, age, and smoking habits
Step 3: The applicable premiums for your profile will be displayed on the side
Step 4: Click on ‘Check the premium’ button to check the available term insurance plans
Step 5: Choose the best term insurance plan and proceed to pay
*Note: You can easily know what is term insurance and then decide on how much term insurance you actually need to cover your loved ones.
To understand ‘How much term insurance do I need’, you need to assess your financial needs and obligations. Since this amount will be paid to your family in the event of your unfortunate death, the life cover amount should be enough to cover your family’s monthly expenses like loans and child’s fees. You should also consider adding the right riders, as they can provide extra coverage against a range of eventualities.
Note: You should also check the benefits of term life insurance if you are planning to purchase the term insurance plan.
˜Top 5 plans based on annualized premium for bookings made on https://www.policybazaar.com in the first 6 months of FY 24-25.
Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
+Rs. 487/month (Rs.16/day) is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.
Prices offered by the insurer are as per the approved insurance plans | #All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply | **Tax Benefits are subject to changes in tax laws.| Policybazaar Insurance Brokers Private Limited
We will respond in the first instance within 30 minutes of the customers contacting us. 30-minute claim support service is for the purpose of giving reasonable assistance to the policyholder in pursuance of the claim. Settlement of claim (including cashless claim) is the responsibility of the insurer as per policy terms and conditions. The 30-minute claim support is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. For further details, 24x7 Claims Support Helpline can be reached out at 1800-258-5881
For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding a sale
Policybazaar Insurance Brokers Private Limited | CIN: U74999HR2014PTC053454 | Registered Office - Plot No.119, Sector - 44, Gurgaon, Haryana – 122001 | Registration No. 742, Valid till 09/06/2027, License category- Composite Broker Visitors are hereby informed that their information submitted on the website may be shared with insurers. Product information is authentic and solely based on the information received from the insurers.
© Copyright 2008-2025 policybazaar.com. All Rights Reserved
+Rs. 820/month is starting price for a 2 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.
+Rs. 1,443/month is starting price for a 5 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.
Buying a home is a major milestone, but it also comes with
Read more
Amit was a 38-year-old marketing professional with big dreams
Read more
Are you looking for an affordable way to protect your family's
Read more
Term insurance is a crucial financial safety net for families
Read moreInsurance
Calculators
Payment Methods
Secured With
Follow us on
