How do you figure out the right amount of life insurance coverage so your loved ones are truly secure?
Is it just a multiple of your salary or do other expenses like debts, future goals, and lifestyle maintenance come into play?
Curious about how experts calculate it for peace of mind without overpaying.
Calculate term life insurance using DIME method: Debts + Income replacement + Mortgage + Education/future goals, minus existing assets/savings.
Thumb rule: 10-20x annual income (e.g., ₹10L salary needs ₹1-2Cr cover); precise needs analysis better for families with loans/kids.
For 30yr salaried in metro (₹12L/yr, home loan ₹1Cr, 2 kids): ₹50L living expenses x 25yrs (₹12.5Cr) + ₹1Cr loan + ₹50L education + ₹20L marriage = ₹14.2Cr total, minus ₹2Cr savings = ₹12Cr needed. Factor 6-7% inflation; review every 5yrs or life events. Single needs ₹5-10L (debts only); married ₹1-4Cr typical. Use online calculators from Tata AIA/Policybazaar for personalization—cheaper young/non-smoker (₹1Cr cover ~₹500-800/mth at 30yrs).
| Life Stage | Recommended Cover | Key Factors |
|---|---|---|
| Single | ₹5-10 Lakhs | Debts, funeral expenses |
| Married (No Kids) | ₹50L-1Cr | Income replacement (10x), spouse needs |
| With Kids/Home Loan | ₹1-4 Cr | +Education ₹25-50L/child, loan cover |
| Mid-career (2 kids) | ₹3-5 Cr | Living x25yrs + goals/inflation |
| Senior (near retirement) | ₹50L-1Cr | Existing assets reduce need |