How Much Term Insurance Cover Do I Need?
A Human Life Value Calculator gives the amount your family members would need to live their life without any financial difficulties in your absence. It is recommended that you should buy this amount of cover. A human life value calculator considers your annual income, age, and prior investments while calculating the amount of life cover appropriate for your family. As per the insurance experts, the term coverage must be at least 15 to 20 times your current annual income.
Human Life Value is the present value of all future liabilities, income expenses and investments. Also, it signifies the economic loss a family would suffer in case of an unforeseen event of your early demise. This HLV number is usually taken to understand how much money would be required to protect your dependent’s lives with a term plan, in case you’re no longer with them.
Let us understand this with an example:
Suppose, you are a 25-year-old male, with an annual income of Rs. 5 Lacs, you will be eligible for a term life insurance plan with a life cover of up to Rs. 1.25 Crore. This means if you buy a term life insurance of Rs. 1.25 Crore, your family will receive this amount in case of your unfortunate death to pay off any existing loans and debts.