A simple, jargon-free way to calculate the right life cover for your family — so you're neither underinsured nor overpaying.
Buying a term plan is one of the most important financial decisions you'll make — but 'how much cover do I need?' stops most people in their tracks. Pick too little and your family is exposed; pick too much and you overpay for years. Here's how to get it right.
The quick rule of thumb
A widely used benchmark is 10 to 15 times your annual income. So if you earn ₹12 lakh a year, you're looking at roughly ₹1.2–1.8 crore of cover. It's a fast starting point, but it ignores your loans and goals, so treat it as a floor, not the final answer.
The better method: Human Life Value
Human Life Value (HLV) estimates the financial value you bring to your family and sizes your cover to replace it. Add these up:
- Income replacement: your annual income × the years until you'd retire.
- Outstanding loans: home loan, car loan, personal loans — everything.
- Future goals: children's education and marriage, your spouse's retirement.
- Minus existing assets: savings, investments and any current life cover.
The total is the cover that would let your family maintain their lifestyle, clear debts and hit their goals even if your income stopped tomorrow.
Short on time? Use our free Human Life Value calculator to get a personalised number in under a minute.
Don't forget inflation
₹1 crore today won't buy the same in 20 years. Choose a cover that accounts for rising costs, or consider an increasing-cover option. As a rule, err slightly higher — the extra premium for more term cover is usually small.
Buy early, lock the price
Term premiums rise sharply with age and depend on your health. Buying in your late 20s or early 30s locks in a low premium for the entire term. Waiting rarely pays off.
Once you know your number, the rest is easy: pick a plan from an insurer with a strong claim-settlement record, add critical-illness and accidental-death riders if they fit, and keep your nominee details updated.