How Much Cover Should I Take In A Term Plan?
Close
Close

Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Term Plan

Protect Your family’s financial future with Kotak e-Term Plan. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and insurance in one premium. Know more

Kotak e-Invest

Insurance and investment in one plan with Kotak e-Invest. Know more

Kotak Health Shield

Insurance against medical expenses related to heart, brain, liver and Cancer. Know more

How Much Cover Should I Take In A Term Plan?

How Much Cover Should I Take In A Term Plan?
  • 15th Dec 2021 |
  • 610

Summary:

Nothing can replace the loss of a loved one. However, monetary compensation is akin to a soothing umbrella against life’s strains. Therefore, contemplate all the factors to decide an appropriate term insurance cover amount as a promissory against an uncertain future. Keep reading to know more. 

Life is unpredictable yet beautiful. Preparedness can diffuse unpredictability to a great extent and retain life’s beauty. Losing a loved one can bring a barrage of emotional and financial turmoil. Staying prepared is the best defense during such unforeseen circumstances. One such way is to buy a term insurance plan .

What is a Term Insurance Plan?

Term covers are pure life insurance plans that provide optimum coverage at a minimal cost. If the insured dies within the policy term, the insurance company pays the sum assured to the family.

Hence, the sum assured should suffice the financial needs of the policyholder’s family and should be in sync with the current and future living standards. Therefore, the term cover amount should not rely only on the insurer’s income; instead, you must decide the amount based on your family’s financial goals. 

Term Insurance Cover Amount: How Much Would Suffice?

Consider the below-listed factors that would make it easier to decide how much term insurance amount would suffice for your family-

1.Your Current Income

Most experts advise that a term insurance cover should be nearly 15 to 20 times an insurer’s annual income. For example, if the yearly income is Rs. 10 lakhs, the term cover should be between Rs. 1.5 crore to 2 crores. However, this advice should be taken with a pinch of salt. While it can help you zero in on the minimum cover, you may need more or lesser coverage depending on other factors, as mentioned below.

2.Your Age

Age is crucial as it indicates the enormity of your responsibilities. When you are young and just starting your career, you may not have too many responsibilities. However, you are more likely to shoulder more responsibilities as you age. Thus, you may need a slightly higher cover

3.Your Financial Liabilities and Assets

If the insurance holder dies early, the coverage should be enough to accommodate the instalments of the current debts and loans. It would help if you also considered the market value of the financial assets as they will help in nullifying the liabilities or helping meet the financial goals. 

4.Your Financial Goals

The objective of buying a term insurance plan is to comfortably meet the financial goals of the insurer’s family, in tandem with maintaining the living standards. Consider a few financial objectives that may impact the cover you will need-

  • Child’s higher education
  • Upcoming wedding expenses in the family
  • Building a retirement corpus
  • Buying a home

5.Premium You Can Afford

This is an essential factor as premiums should fit in easily in the insurer’s disposable income bracket. A higher term cover amount may seem enticing, but a very high premium may result in payment defaults and policy elapse.

Most experts advise that a term insurance cover should be nearly 15 to 20 times an insurer’s annual income. For example, if the yearly income is Rs. 10 lakhs, the term cover should be between Rs. 1.5 crore to 2 crores. However, this advice should be taken with a pinch of salt. While it can help you zero in on the minimum cover, you may need more or lesser coverage depending on other factors, as mentioned below.

Calculate Human Life Value (HLV) to Find the Right Cover

While the factors mentioned above can help you determine the right cover, they all work together under complex environments. It is difficult to put a value on human life. This is where HLV calculators can help you determine the right cover. They consider all the factors and suggest the right cover that you will need to secure your family’s future financially. Use such calculators online to find out the right coverage amount and buy the most suitable term plan. 

Kotak e-Term Plan

Download Brochure

Features

  • Nominal Cost
  • Multiple Plan Options
  • Flexible Payout Options
  • Critical Illness Rider
  • Tax Savings
  • Long term Coverage

Ref. No. KLI/22-23/E-BB/492

T&C

Browse our library of resources

- A Consumer Education Initiative series by Kotak Life

Similar Articles

Why should single women purchase term life insurance?

How to Identify Term Insurance According to Your Needs?

Should you have more than one nominee in your term insurance?

Should Youngsters, Working Couples Buy Term Insurance Plans?

Does Your Term Insurance Plan Cover Death Due to COVID-19?

10-Year Term Life Insurance Policy - Explained in Detail

9 Most Frequently Asked Questions on Term Insurance

Steps on How to Buy Term Insurance Online

Top 3 Reasons Why You Should Buy A Term Plan Now

Which Death Type Does Your Term Plan Not Cover?

Insuring yourself against Ill Health with a Critical Illness Rider

जीवन बीमा पॉलिसी लेने की प्रक्रिया क्या है?

What Happens if you Hide Facts in your Term Insurance?

Insurance Policy for Housewife In India

Is There Any Tax Benefit on Term Insurance?

Term Insurance With Riders In India

Why You Must Include In Your Financial Planning?

What is Term Insurance? Term Plan Meaning and Definition

Know How to Invest at Every Age for Larger Returns

Which Term Insurance to Choose: Lump Sum or Staggered Pay-out Plan?

8 Factors to consider before choosing a Critical Illness Insurance

How to Compare Term Insurance Online

Can I Buy Term Insurance for a COVID-19 Patient?

What is a Joint Term Insurance Plan? Key Benefits of Joint Term Plan

Term Insurance vs Life Insurance: Understand the Difference and Benefits

What is Insurance Premium - A Detailed Guide

8 Benefits of Term Insurance You Should Know

Calculating Term Insurance Premium

Difference Between Term Insurance and Endowment Plan

What All Documents Required For Term Insurance In India?

Why Spending Time with Friends is Essential for Your Mental Health?

Term Life Insurance Plan for Smokers vs Non-Smokers

Can Term Insurance Plans Be Purchased As A Gift?

Why Buy Term Insurance Plan With a High Cover?

Advantages of Buying Term Insurance in Your 50s

Protection for your family

Term Insurance Age Limit – Term Plan for All Age Groups

Key IRDAI Regulations That Changed Face Of Term Insurance Industry In 2020

Insuring Against Accidents with an Accidental Death Insurance Rider

How To Change The Nominee in Term Insurance?

Does Term Insurance Cover Accidental Death?

What Should You opt for - Limited or Premium Pay?

Why Premium Amount for Term Insurance is So Low?

5 Benefits of Early Retirement Planning

9 Ways to Help Family Members in Financial Trouble

Should you buy a Renewable Term Life Policy?

Why Should You Buy Term Insurance in 2022?

Do You Need Term Insurance Cover After Retirement?

5 Reasons to Buy Term Insurance When You are in Your 30s

6 Reasons That Make Term Insurance a Must Buy

Cost of Term Insurance Likely to Increase Soon

What is a short term insurance policy?

How do I Calculate My Term Insurance Premium

What Happens to Term Insurance Plan With No Beneficiary - Kotak Life

Is Life Insurance Investment Worthy Enough

Why does every working women need life insurance?

9 Point Guide on how to File Income Tax Return Online

Why Married People Should Buy Term Insurance Under MWP Act?

Busting Myths and Facts About Term Insurance Policies

Difference between Section 80C and 80CCC of the Income Tax Act, 1961

How to Surrender Term Life Insurance When You Have No Liabilities?

What Is a Passive Income? Why Should You Use It to Buy a Term Plan?

Ideal Features of a Suitable Term Plan - Act Now for a Stress-free Future

10 Ways to Get Your Kids Involved in Your Healthy Lifestyle

Do Beneficiaries Pay Taxes on Term Insurance?

What are the Tax Benefits of Sukanya Samriddhi Yojana (SSY)?

Term Insurance: Smokers vs Non-Smokers

Should You Buy a Term Plan After 40?

Why 1 Cr Term Plan Is Necessary For Family?

Term Insurance Plans and Policies for Smokers

Side Effects of Covid-19 Booster Doses

Planning For Son or Daughter's Wedding

10 Ways to Mentally Refresh After a Stressful Day

Different Types of Protection Plans

Can A Housewife Buy a Term Insurance Plan - All You Need to Know

Are The Add-ons and Optional Features of Term Insurance Plans Actually Beneficial?

Can I Make Changes to My Term Insurance Policy Post Purchase?

Should You Have Multiple Term Life Insurance Policies?

Best Investment Plans for Children - Secure Your Child's Future

Term Plans are Definitely Cheaper than You Think!

Why Should You Not Take A Term Plan Without Medical Test in India?

Different Types of Premiums in Term Insurance?

Zero Cost Term Insurance Plan: What is & Should you buy it?

Why is it important to buy term insurance plan?

Can Senior Citizens Avail Term Insurance?

Why Term Insurance Is Important in times of COVID-19?

Term Insurance with Critical Illness

Can Non-Resident Indians (NRIs) Buy Term Insurance In India?

Key Differences Between Term Insurance, ULIPs, And Health Insurance

Term Insurance Calculator - Everythng You Need To Know

Importance of Term Insurance at Every Stage of Your Life

Why Surrendering Your Term Plan Policy In The Final Phase Maybe A Bad Idea?

When is the Right Time to Buy Term Life Insurance Policy for Yourself?

Increasing Term Insurance and Riders

All About Term Insurance Inbuilt Coverage

Tax Benefits of Term Insurance in India

Endowment Plans vs Term Plans: Understanding the difference

What Is the Correct Age to Buy Term Insurance?

What is the Right Term Period For Term Insurance Policy? Here's How You Should Choose!

6 Types of Death not covered in Term Insurance Plan

How Not To Get Your Term Insurance Claim Rejected

Why Should New Parents Buy Term Life Insurance?

Can You Increase Your Term Insurance Cover?

What Should Be The Duration Of Your Term Plan in India?

Individual Life Insurance vs. Group Term Life Insurance

What Types of Deaths Are Covered in a Term Insurance Plan?

Insuring Protection Against Death With Death Insurance Rider

Everything About Claim Settlement Ratio for Term Insurance

How To Choose the Right Sum Assured Under a Term Plan?

While Buying Term Insurance Compare Features, Not Just Premiums

Make Your Online Term Plan Your Family's Monthly Pay Cheque

How to Ensure That Your Term Insurance Claims Are Never Rejected?

3 Things to Consider When Buying Term Insurance, If You are Single

Buying A Term Insurance? Don't Ignore the Claims Settlement Ratio

How Does A Term Life Insurance Work in India?

Reasons You Need Term Insurance Plan as a Self-Employed Person

All about Online Income Tax Calculator

कोविड -19 बूस्टर खुराक के दुष्प्रभाव

Term Insurance: Most Common Term Insurance Myths Explained | Kotak Life

What Are the Best Term Insurance Plans for Planning Retirement?

Ensure Protection Against Death, Disease & Disability With Life Insurance

Can I Get Term Insurance on Behalf of My Spouse?

Do I Need to Give a Medical Test for Term Insurance in India?

Form 16, Form 16A, and Form 16B?

Term Plan with Spouse Cover

टर्म इंश्योरेंस क्या है? टर्म इंश्योरेंस का मतलब

Can I Extend the Tenure of My Term Insurance Plan?

Is ₹1 Crore Term Insurance Good Enough Cover?

9 Tax Changes in Budget 2019 that may Impact Your Personal Financial Planning

Term Vs. Whole Life Insurance: Which One You Should Buy in India?

What are incremental term insurance plans?

Is Term Life Insurance Plan an Investment or Expense?

What are the Documents Required for Term Insurance Plan?

Is Group Term Life Insurance Provided By Employer Sufficient?

How Does Term Life Insurance Work? Learn the Benefits

भारत में गृहणियों के लिए टर्म इंश्योरेंस

How to Buy 1 Crore Life Insurance Policy Without Medical Test

Comparing Term Plans – What Should You Look Out For

What Are Insurance Riders and How to Choose Them in a Term Plan?

Term Insurance Basics You Should Know

Is a Term Insurance Policy Portable?

How To Choose the Right Term Insurance Plan?

Why Term Insurance Is Better Than ULIP?

How Much Term Insurance Do I Need

5 Term Insurance Benefits for Single Women

Is It Good To Buy A Term Insurance Plan In 2022?

Gift Your Father A Term Insurance Plan This Father's Day

Why Buy Term Insurance Even at Rising Rates?

How Much Term Life Insurance Cover Do I Need?

Why Buying a Term Plan Is Smarter Than Traditional Life Insurance Products

4 Reasons Why You Need Critical Illness Cover

Insuring Against Disability With Disability Insurance Rider

भारत में जीवन बीमा कितने प्रकार के होते हैं?

5 Things To Consider While Buying Term Insurance Plan

Buying A Term Insurance Plan? Take These Factors into Account

Online vs Offline Term Insurance: Which Is The Better Option To Buy

How To Calculate The Amount Of Term Life Insurance You Need?

Is term Insurance Needed for People With No Dependents?

What is a term insurance plan with a return of premium, and how does it work?

Is it a Good Time to Buy Term Insurance During the COVID-19 Pandemic?

What is Critical Illness Policy?

Term Insurance: What Happens When You Don’t Pay Your Premiums?

Make Your Online Term Plan Your Familys Monthly Payout

What is Form 16, Form 16 part A, Form 16 part B, Information Required and FAQs

Planning For Children's Future

8 Things To Do After Buying Term Insurance

Why Should You Add a Rider to a Term Insurance Plan?

Understanding Term Insurance Riders

Advantages & Disadvantages of Term Insurance in India

Choosing Riders for Insurance Plans

All you need to Know about Term Insurance Plans for housewives

Why Term Plan Should Be The First Step To Securing Your Future?

8 Types of Death not covered in Term Insurance Plan

What Is a Renewable Term Insurance Policy?

4 Things To Expect From Your Term Insurance Plan in India

4 Methods to Calculate How Much Term Insurance You Need

Tips to Choose the Right Term Period for Term Insurance Plan

Eligibility Criteria for Buying Term Insurance in India