How to Choose Life Insurance Plans According to Your Income?

Regardless of how much an individual earns, buying a life insurance policy is a very crucial financial decision. Any individual who has dependents or major debts should definitely consider buying a life insurance policy in order to secure their family financially. However, instead of blindly choosing any life insurance policy, you should always do your homework well and determine if the offered sum assured will suit your requirements.

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Life insurance coverage comes with various in-built features and there are many different factors that determine the price of a life insurance policy. However, let’s not get into this discussion now and instead, focus on how to choose a life insurance coverage according to your income.

Term Plans

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Crore

Life Cover

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₹50
LAKH

Life Cover

@ Starting from ₹ 8/day⁺

₹75
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Life Cover

@ Starting from ₹ 12/day⁺

Before zeroing in on a policy it is very important to calculate the sum assured required. One can compute this very simply way by determining one’s daily expenses, pending financial liabilities (debts), and factoring in other inevitable expenses such as children’s education, weddings, etc.

Here are some these factors explained in detail:

Current Expenses-

The major motive of buying a life insurance policy is to ensure that the lifestyle of your family is not affected in any way. According to whatever income group you fall in, don’t forget to add all the monthly expenses and multiply them with 12 to determine the yearly expenditure. Some of the major expenses you need to add are:

Premiums paid collectively by your family.
Monthly expenditure like utility bills, grocery, etc.
Children education fees.
Miscellaneous expenses.

These are basic minimum expenses that should be taken care of in case of your demise. As an insured, you need to calculate these expenses over a year and also factor in the inflation factor in mind. For example, if you are 45 years old and your basic yearly expense comes to an estimated Rs. 4,00,000 per year and the inflation rate remains static at 7% per year. Then the same expenses will amount to approximately Rs. 13,00,000 a year after a decade or so. Therefore, the average amount required as an expense will be Rs. 7,00,000 per annum.

So, you will require a sum assured of Rs 1.4 crores i.e. 7,00,000* 20 (Number of years until retirement).

Income Multiplier-

Income multiplier method is another efficient method that can be used to decide the insurance cover you need. Under this technique, you are required to multiply your income by the age group factor you belong too. Thus, you can calculate the minimum and maximum sum assured you will require according to your age group and income. While using the method of income multiplier you will be required to deduct your expenditure from your net income and then use the factor of multiplication. For individuals within the age bracket of 20-30 years, the minimum insurance coverage multiplied by the income by a factor of 5 and for maximum insurance coverage multiply the income by a factor of 10. If you are above the age of 30 years, you can refer to this table.

Age Group	Minimum Multiple	Maximum multiple
30-40	15	20
40-50	10	15
50-60	5	10

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Calculation of life insurance policy should not be made only at the time of policy purchase, but rather should be reviewed once in every five years. Thus, if required, additional policies can be bought to provide wholesome support to your family. Moreover, with the help of this method, you can figure out the amount of sum assured you should have.

Assets and Liabilities-

Buying a house is one of the biggest liabilities that one invariably has to incur in one’s lifetime and a major proportion of individuals need to take a home loan for this expense. The insured must add their home loan and any other debts to their list of liabilities, and make a separate list of assets like gold, investments made in the capital market, fixed deposits, etc. By calculating the assets and liabilities one can compute the amount of sum assured he/she will require.

Wrapping it up!

It is a known fact that most individuals need life insurance sooner or later in life. However, it is very important to know that what kind of life insurance policy will suit you as per your requirements and how much is the sum assured that you should choose. If you choose to buy the policy online, then don’t forget to compare life insurance policies online and avoid getting stuck with insufficient coverage that will not help you in your time of need.

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

Note: Check all the best term insurance plan in India.

Note: You should also check the benefits of term life insurance if you are planning to purchase the term insurance plan.

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˜The insurers/plans mentioned are arranged in order of highest to lowest Sum Assured(SA) offered by Policybazaar’s insurer partners offering term insurance plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI.

Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in

Rs. 400/month is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

Rs. 400/month (Rs.13/day) is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 230 is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 8/day is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 12/day is starting price for a 75 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 497/month is starting price for a 1.5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 487/month is starting price for a 2 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 626/month is starting price for a 3 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 905/month is starting price for a 5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,267/month is starting price for a 7 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

*The full refund of premium is available on availing the one-time option of refund of premium. Total premium paid for policy (paid for add-ons) will be the special exit value, payable on availing the one-time option of refund of premium if you wish to completely exit the policy.

+Rs. 447/month is starting price for a 1 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs.679/month is starting price for a 2 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 910/month is starting price for a 3 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,374/month is starting price for a 5 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,924month is starting price for a 7 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

Women

+Rs. 400/month is Starting price for a 1 crore term life insurance for an 18 year-old Female, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

Rs. 461/month is the starting price for a 1 crore term life insurance for an 24 year-old female, non-smoker, with no pre-existing diseases, cover upto 54 years of age.

1,642/month is the starting price for a 1 crore term life insurance for an 44 year-old female, non-smoker, with no pre-existing diseases, cover upto 74 years of age.

Prices offered by the insurer are as per the approved insurance plans | #All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply | **Tax Benefits are subject to changes in tax laws.| Policybazaar Insurance Brokers Private Limited

We will respond in the first instance within 30 minutes of the customers contacting us. 30-minute claim support service is for the purpose of giving reasonable assistance to the policyholder in pursuance of the claim. Settlement of claim (including cashless claim) is the responsibility of the insurer as per policy terms and conditions. The 30-minute claim support is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. For further details, 24x7 Claims Support Helpline can be reached out at 1800-258-5881

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