How Much Term Insurance Do I Need

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How Much Term Insurance Do I Need

Term Insurance Quote
  • 18th Dec 2018
  • 1,927

How Much Term Insurance Do I Need

Life is uncertain. It is best to be prepared for the unknown and secure your loved ones through term insurance. “How much term insurance do I need? “ – this is a question asked by most of us when we are looking at term insurance plans. You need to consider the main objective of your insurance. Is it to provide financial support to the family in case of the death or illness or disability of the primary earning member? Then the term insurance cover should be such that it allows your family to live a comfortable life without comprising on the lifestyle. The industry experts normally recommend that your term insurance cover should be at least 15-20 times of your current annual income. For example, if your current annual income is INR 10 lakh then your term insurance cover should be between INR 1.5 to 2 crore. Only then can you ensure that your family continues to live the same lifestyle even in your absence. Use the ‘how much term insurance do I need calculators’ to add permutations and combinations and arrive at the right amount for your term cover.

Let us look at a few factors that you must consider before deciding on your term insurance cover amount.


Your current age is one of the main factors in determining an adequate term insurance cover for you and your family. If you are young, you will have many financial liabilities in the future such as wedding, children’s education, and the purchase of a new house, among others. As you start earning, you must save and invest, in order to reduce your financial liabilities. If you are young, you will get a substantial term insurance cover at an affordable premium cost.

Current expenditures

Your current lifestyle will depend on your current income. Your family is used to living in a certain way and you need to ensure that they are able to maintain that lifestyle in the future, in case of an untoward incident occurs. Calculate the money that will be needed for your family to meet the necessities of life and avoid financial suffering. Write down the cost, which is incurred on a monthly basis, add the cost of inflation, account for any big expenses you may have in the future, and accordingly decide on the term insurance amount.

Children’s expenses

Education plays a very important role in the future of children. We all want to give the best to our kids for them to lead successful lives. You need to consider their education expenses along with the inflation factor while deciding your term insurance coverage. Also, if you want to conduct your children’s’ wedding on a large scale, you need to calculate an approximate lump sum amount and include the same in your term insurance cover amount.


This is a critical factor in deciding your term insurance cover. If you already have taken a loan and you are paying EMI each month, you do not want your family to struggle with repayment in case something happens to you. Chances are you already have insurance on the loan to take care of emergencies. In case you have any unprotected loans, ensure you include that amount as well in your term insurance cover.


Take into consideration all the assets you have accumulated till date before deciding on a term insurance cover amount.

The above are a few parameters, which can help you correctly answer the question - “How much term insurance do I need?” If you browse through the Internet, you will come across multiple websites that offer you the ‘how much term insurance do I need calculators,’ which allow you to enter your data and recommend an ideal insurance amount. Term insurance is very subjective and hence it is recommended to take time out, think carefully, and then go for a plan and cover as per your personal requirements.

- A Consumer Education Initiative series by Kotak Life

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