Term Insurance Calculator
Two methods, and the larger of the two — because underinsuring is the expensive error.
- Income the household loses, in today's money
- ₹3,97,10,280.37
- What the dependants actually have to fund
- ₹2,69,60,193.78
- Recommended — the larger of the two
- ₹3,97,10,280.37
Two methods, because neither is sufficient alone. Human life value is the present value of the income your household would lose, net of what you consumed yourself. The needs method prices what your dependants actually have to fund — running costs for as long as they need support, plus loans, plus education and marriage goals, less what you already have. The recommendation is the larger of the two, because underinsuring is the expensive error. It is cross-checked against the ten-to-twenty-times-income rule of thumb, and where it falls outside that band you are told rather than having the figure quietly clamped, since it usually means an input is wrong. Buy term insurance, not an endowment or a money-back policy: term is pure cover and costs a small fraction of the same sum assured wrapped in an investment. Round up to the nearest ₹25 lakh — premiums are close to linear in the sum assured, so the marginal cost of rounding up is trivial next to the shortfall risk. And note that employer group cover ends with the job, so discount it heavily.
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Independent · No commissions · No fund-house data — how the numbers are computed
How it works
Two methods, because neither is sufficient on its own. Human life value is the present value of the income your household would lose, net of what you consumed yourself. The needs method prices what your dependants actually have to fund — running costs for as long as they need support, plus outstanding loans, plus education and marriage goals, less what you already have.
The recommendation is the larger of the two, because underinsuring is the expensive error and the premium difference between adequate and generous cover is small. It is cross-checked against the ten-to-twenty-times-income rule of thumb, and where it falls outside that band you are told rather than having the figure quietly clamped — it usually means an input is wrong.
One thing worth stating plainly: buy term insurance, not an endowment or a money-back policy. Term is pure cover with no investment component, and it costs a small fraction of the same sum assured wrapped in a savings product.
Human life value = present value of (income - your own expenses) over your remaining working years, plus liabilities and goals, less existing assets and cover. Needs method = present value of household expenses over the support period, plus liabilities and goals, less existing assets and cover.Both discount future amounts to today's money, and the needs method works in real terms — the discount rate net of inflation — so the figure holds as costs rise.
Frequently asked questions
How much term cover do I actually need?
Usually ten to twenty times your annual income, with the multiple higher when you are younger, more heavily indebted, or supporting more people. The two methods here give a more specific figure than the rule of thumb because they count your actual loans, goals and existing assets. Round the answer up to the nearest ₹25 lakh — premiums are close to linear in the sum assured, so the marginal cost of rounding up is trivial against the shortfall risk.
Does my employer's group cover count?
Only lightly, and it should be discounted heavily rather than subtracted at face value. Group life cover ends when the job does, which is often exactly when you would least want to be buying fresh insurance — and premiums rise with age and with any health condition acquired in the meantime. Treat it as a supplement to your own policy, not as a substitute.
Should I buy term insurance or an endowment policy?
Term, in almost every case. Term insurance is pure cover: you pay a small premium for a large sum assured and get nothing back if you survive, which is exactly what insurance is meant to be. An endowment bundles a poor investment onto that cover and typically returns 4% to 6% a year, so you end up both under-insured and under-invested. Buy the cover you need as term and invest the difference separately.
How long should the policy run?
Until your dependants no longer depend on your income — usually until your planned retirement, or until the youngest child is financially independent and the home loan is cleared, whichever is later. Cover beyond that point is generally unnecessary, because by then your accumulated assets are doing the job the policy was buying time for.