To calculate the right sum assured that will sufficiently cover your family’s financial needs in your absence, you should use a Human Life Value Calculator. The HLV calculator estimates the life cover amount you are eligible to purchase depending on your current annual income and age. As per the insurance experts, the ideal life cover for your term life insurance should be at least 15 to 20 times the annual income at the time of policy purchase.
So for example, if you currently earn 9 LPA and are 27 years old, if you do not have any other active life insurance, then you are eligible to buy term plan for Rs. 2.25 Crores of sum assured. In case you buy term insurance with Rs. 2.25 Crores as the sum assured, then this is the amount that will be paid to your family in case of your unfortunate death. Your family will be able to use this amount to pay for the child’s higher education and fulfil their lifelong goals like buying a house.
Here is a quick and easy way to calculate your HLV. All you need to do is enter your current age, annual income, and if you have any existing life cover.