I am 35 years old with two children. How much term insurance coverage should I choose to make sure my family is financially secure if something happens to me?
Financial pressures can be at their highest at the age of 35, the home loans, car loans, school fees and any long-term investments such as higher education of children. All these needs must be factored into the right term insurance cover in order to allow the family to live without financial pressures.
credits : How Much Term Insurance Do I Need? and How to Calculate it? | HDFC Life
Calculating Term Insurance Cover Based on Income Replacement
At age 35, when I looked at my finances, I knew that I would have to do more than cover my income. I estimated my unpaid mortgage, the future tuition fees of two children and the long-term living expenses of my spouse. Altogether, they amounted to much more than 1 crore. Finally, I decided on a coverage of about 1518 times my yearly earnings, which made me secure that I could rely on all of these requirements being addressed.
Adding Children’s Future Education Costs Into Term Plan Cover
One of my friends took a different approach to term insurance- he considered the higher education of his children. Higher education, he guessed, might cost a child 20-30 lakh in the future. To finance this he set aside 60 lakh simply by way of education alone besides his current liabilities. His entire cover was nearly 2 crore which appeared to be a lot at first, but he felt safe knowing that he did not have to worry about his kids education ever again.
Covering Loans and Family Expenses With Term Insurance at 35
One of my colleagues was practical. He summed his home loan, car loan and annual household expenditure of his family. He hoped that his term plan would pay off these debts and keep his family lifestyle going at least 15 years. This computation took him to about 1.5 crore of coverage and it left him relaxed since his family will not have to worry about EMIs or monthly payments.
Why Term Insurance Cover Needs to Grow With Age and Kids
The difference between what I had selected at 35 and what I had selected at 30 was enormous. When I was 30, I had already planned about the parents and some simple things to spend money. However, at age 35, child education, life development and increased responsibility introduced new dimensions to me which I had not previously thought of. This has helped me to understand that term insurance is not a one-stop shop and that it has to expand with the financial obligations of life.
1 Like