How much Life Insurance do I need?


Dear Fpguru,
My query is regarding how much life insurance cover should I take .My package is Rs 9 Lacs p.a. I have a small family with one child studying in 12th standard.



Rajesh Mishra

Dear Mr Rajesh,

Thanks for visiting our website. It is very important that a person should take optimum life insurance coverage for himself. When we say ‘himself’ we actually mean for the person’s dependents!

Life insurance is not required by everyone. It is required by only someone who is earning an income & has financial dependents. You are the bread earner of your family & thus you require life insurance. The second question is how much? To be very honest with you, to find the exact amount of insurance you require we would need to make a financial plan for you. This will give you a very accurate figure for life cover.

We can however use the rule of thumb method & say you need atleast 10 years income as you sum assured as this is the minimum that you can leave back for your dependents. So that makes it Rs 90 lacs. You can add the amount you would require for your daughter’s college education & wedding & this amount will go up.

The best way to take such cover would be a term life plan.The premium is much cheaper than other plans & gives you the cover sought. For more on term life plan please click here. We would still suggest you to make a financial plan for an accurate Sum Assured.

Hope this solves your query!


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