Term insurance calculator: how much life cover does your family need?
Life cover is meant to replace the income your family would lose, clear your loans and pay for the goals you had planned for them. This calculator works that out from your own numbers, using the human life value method, and shows how far your existing cover goes towards it.
Your figures stay in your browser. Nothing is sent anywhere until you choose to start the full assessment.
Open the calculator to work out your own figure.
How the number is worked out
- Income to replace: your yearly income minus your own spending (the part that stops with you), for every year you would have kept earning. Each year’s income grows with your pay and is brought back to today’s value.
- Plus your outstanding loans, so your family is not left with the home loan or other debts.
- Plus children’s higher education and marriage if you plan for them, at today’s cost grown by inflation to when they are likely to be needed.
- Plus yearly support for your spouse if you enter it under More options: that amount for each of your remaining working years, with five years of inflation added.
- Minus the savings and investments your family could draw on: bank balances, mutual funds, shares and gold. Your home is not counted, because your family would still need somewhere to live.
- Plus a 10% safety margin. The result is the cover we suggest; subtracting the life cover you already hold gives the gap.
A worked example
Rahul is 34, earns ₹18.00 L a year and spends about ₹3.00 L a year on himself. He has 26 working years left, a home loan of ₹40.00 L, ₹10.00 L in savings and investments, and a ₹50.00 L term plan.
His family would need about ₹4.30 Cr of cover. His plan covers ₹50.00 L of it, leaving a gap of ₹3.80 Cr. Most of the need is replacing his income; the home loan is the next largest part.
| Income to replace | ₹3.61 Cr |
| Loans to clear | ₹40.00 L |
| Less savings and investments | − ₹10.00 L |
| Suggested cover (with 10% margin) | ₹4.30 Cr |
| Existing term cover | ₹50.00 L |
| Gap | ₹3.80 Cr |
Assumptions
- Unless you change them under More options: pay grows 8% a year, future income is discounted at a 8% investment return to today’s value, and inflation is 6% a year. These are the same defaults as the full assessment.
- Education is needed in 15 years and marriage in 20, both at today’s cost grown by inflation.
- A 10% safety margin is added to the net need.
- Your home is never counted against the cover your family needs.
Frequently asked questions
How much term insurance do I need?
Enough to replace the income your family would lose, clear your loans and fund the goals you had planned, less the savings they could draw on. Rules of thumb such as 10 to 15 times your income are a starting point, but they ignore your loans, your savings and how long you have left to work. This calculator uses your own figures instead.
What is human life value?
Human life value is today’s value of the income you would have earned for your family over the rest of your working life, after your own spending. It is the core of the life cover a family needs; loans and planned goals are added to it.
Why is my home not counted?
Selling the family home is rarely a realistic way to replace a lost income, so counting it would suggest less cover than the family needs. Savings and investments they could actually draw on are counted.
Should I count my employer’s group life cover?
You can include it as existing cover, but group cover usually ends when you leave the job, and it may not be enough on its own. Many people keep a personal term plan so their family is protected whatever happens to their employment.
Is this financial advice?
No. It is an educational estimate built from the figures you enter. Before buying a policy, speak to an IRDAI-licensed adviser who can look at your whole situation.