The first thing to ask is — How much money would your family need if you were not there to earn for them?
The answer depends on your lifestyle, expenses, and financial responsibilities. Let’s break it down:
If your family spends around ₹50,000 every month, your term plan should be able to replace that income.
For example, if your family receives ₹1 crore from the policy and keeps it in a fixed deposit at 6% interest, they would earn ₹6 lakh per year (₹50,000 per month). That’s enough to cover their expenses.
But here’s the catch — inflation will slowly reduce the value of that ₹6 lakh. So, it’s better to aim for a higher cover.
If you go for ₹2 crores, the interest could give your family ₹12 lakh per year. That amount will help maintain their lifestyle for a longer time and give them more security.
If you also have loans or EMIs, you should choose an even higher cover so that your family can pay off debts without stress.
Tip: The goal is to pick an amount that covers all family expenses, takes care of EMIs, and still leaves some extra money for their future.
You can use our free term insurance calculator to figure out the perfect cover for your needs.
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Term Insurance 101