Prices Increasing soon Prices Increasing Soon

How To Calculate Life Insurance Coverage

We often hear it is a rule of thumb that life insurance cover must be 6 to 7 times as much as the yearly income. Suppose a person earning 4 lakhs per annum goes must decide on an insurance of 30 lakhs (more than 7 times the amount). If he has a family of four and an expense of 3 lakhs per annum excluding himself, that amount is supposed to provide coverage for around 10 years. But factoring inflation, it will actually be sufficient for 5 years only, after which his family will face severe financial crisis.

Read more
Gets ₹1 Cr. Life Cover at just
COVID-19 Covered
The Policybazaar Advantage
Dedicated claim support for family FREE
Upto 10% discount for buying online
Only certified experts will call you on 100% recorded lines
We are rated~
rating
58.9 Million
Registered Consumer
51
Insurance Partners
26.4 Million
Policies Sold

#All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply

By clicking on "View plans" you agree to our Privacy Policy and Terms of use

~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ

Life is Unpredictable! Protect your family’s future
Get ₹1 Crore Life cover starting from ₹384/month+
+91
Secure
We don’t spam
Check Your Premium Now
Please wait. We Are Processing..
Get Updates on WhatsApp
The Policybazaar Advantage
Policybazaar Advantage Icon
Dedicated claim support for family FREE
Policybazaar team will help and support you at the time of claim. A personal claim handler from our team of experts will get in touch with you when your nominee applies for a claim on our website.
Policybazaar Advantage Icon
100% calls recorded to ensure no mis-selling
We will make sure you get what is promised by the advisors. We conduct regular monitoring of our calls to make sure you get the best experience.
Policybazaar Advantage Icon
Exclusive lifetime discount upto 5% for buying online
The discounts will be valid for the entire policy payment term and is not available if you choose to buy the insurance through offline agents.
Policybazaar Advantage Icon
Advisors available in your city
Our advisors are available in more than 55 cities across India and can help you at your doorstep in understanding the plans and in documentation.
Policybazaar Advantage Icon
Refund at the click of a button
In case you aren’t happy with your purchase, you can cancel your policy hassle-free at the click of a button. We will help you with the cancellation and refund of your policy.

When it comes to insurance you must take into account factors like standing debts or standard of living. While calculating your insurance cover, you must follow some basic steps before proceeding any further:

Step 1. Calculate your total unavoidable expenses (TUE)

This is a major part of your insurance coverage. The main reason for getting insurance is to provide your dependents with at least the basic needs after your demise. So make sure to include the following costs, among others :

  • Your child’s education costs

  • Household bills

  • Other insurance premium for your dependents, like medical, automobile and housing

  • Medical needs, entertainment and other recurring expenditures

This gives the total unavoidable expenses (TUE) for one year. But the actual cost must also take inflation into account; for this purpose use an inflation calculator. Factor in an approximate number of years for which the money will be needed.

Step 2. Add Your Debts (D) and Subtract Your Assets (A)

Any outstanding loans, mortgages, credit card bills, or other types of debt must be added to the TUE. However, any disposable property, such as land, an extra house, gold, stocks and fixed deposits must be subtracted as they can be liquidated to meet immediate expenses. Make sure that you do not subtract the value of your current residence.

Step 3. Add Arbitrary Responsibility Expenses (ARE)

This step factors in large predictable expenses which are taken on by the policy holder as secondary responsibility, after meeting the family’s unavoidable expenses. This may include higher education and weddings for children, as well as your funeral which can also pose a considerable expense. This varies according to personal requirements, but remember to factor in inflation,over and above current prices.

After completing these 3 steps, make the final calculation:

TUE+ARE+D-A=Sum Assured

This will give you an accurate idea of the minimum insurance cover you should opt for, given your current standard of living and long term goals.

Now that you have calculated the amount of life insurance coverage that you need, ask yourself some important questions before purchasing a policy…

How much do you save each month? If you have a substantial retirement fund, then you may go for a smaller coverage amount as in case of your demise, those funds will be allocated to your dependents.
Will your dependents use the lumpsum, or reinvest it? If your family does not encash the claim, but reinvests it to yield interest, then your coverage amount can be lower. The interest will then make up the deficit over time.
When are you beginning to invest? If you begin investing at a younger age, you can avail a better coverage at a low premium.
How long are you investing for? Ideally, life insurance should have coverage till at least 65 years. Depending on your insurance term plan, you can get a better premium rate for your required coverage.
Do you need insurance? This question must be answered before taking any final decision. If you do not have any children and if your spouse has a high paying job, then purchasing insurance may not make sense. Conversely, if your children are older (say, about 16) and you have adequate educational funds in place for them, an expensive policy may not make sense for you.

Note: It is suggested to calculate the term plan premium on the term plan calculator online tool by Policybazaar before buying.


Premium By Age

Choose Term Insurance Plan as per you need

Plans starting from @ ₹473/Month*
Term Insurance
4 Crore Term Insurance
Term Insurance
6 Crore Term Insurance
Term Insurance
7 Crore Term Insurance
Term Insurance
7.5 Crore Term Insurance
Term Insurance
8 Crore Term Insurance
Term Insurance
9 Crore Term Insurance
Term Insurance
15 Crore Term Insurance
Term Insurance
20 Crore Term Insurance
Term Insurance
25 Crore Term Insurance
Term Insurance
30 Crore Term Insurance
Term Insurance
15 Lakh Term Insurance
Term Insurance
60 Lakh Term Insurance

Life Insurance Articles

  • Recent Article
  • Popular Articles
24 Apr 2024

Most Common Life Insurance Frauds in India

Life insurance fraud is a financial crime that can be committed

Read more
09 Aug 2023

What High Net Worth Individuals (HNIs) Do To...

High net worth individuals often opt for life insurance plans to

Read more
28 Jun 2023

A Review Of ICICI Prudential Life Insurance

“Policy Bazaar insurance clarified the term policy for me, so

Read more
27 Jun 2023

A Review Of HDFC Life Insurance

“I recently bought an HDFC term plan and it is the best

Read more
20 Jun 2023

Best Life Insurance Policy in India with High...

The best life insurance policy in India is a type of life

Read more

Life Insurance for Parents in India

With the increase in the average life expectancy rate, the older population in India is on the rise. Most of the

Read more

Life Insurance for NRI

Going beyond geographical boundaries to study or pursue a career abroad is a common aspiration for many

Read more

Life Insurance Quotes

Life insurance quotes are the approximate premium rates for the specific life insurance policy. It helps you

Read more

Canara Guaranteed Fortune Plan

Canara HSBC life insurance company introduces a guaranteed fortune plan that provides assured benefits to life

Read more

Life Insurance For Women

Consistently, the role of woman in the family and the business world has changed a considerable amount

Read more
Need Help? Request Callback
top
View Plans
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL