There are some wonderful life insurance products available in India these days, and term insurance is among the most popular ones. Term insurance is a great solution for everyone who needs life insurance coverage at an affordable rate. Term insurance has several benefits. However, to get the maximum value from a term insurance plan, one must opt for the perfect coverage amount. Take a look at this article to know how you can decide upon the ideal coverage that would help your family after you are gone.
Easy way to calculate the term life insurance coverage
As a rule of thumb, experts advise you to fix your coverage amount to 10 times your current salary. So, if you have an annual income of INR 3 lakhs, try to get a term plan for INR 3 crores. While this serves most people well, your exact requirements may be different so before you finalise the amount, you need to keep a few factors in mind. In the next section, we discuss the coverage calculation in detail.
Factors to consider when choosing the term insurance coverage amount
- Your age
The term insurance coverage can depend on your age. If you are young and have many familial responsibilities, you need a larger corpus. If, however you are close to your retirement and only have some specific financial goals to cover, you can settle for a lower coverage amount. Hence, keep the very important factor of your age in mind when you choose the ideal term insurance coverage.
- Your loans and debts
The next important factor to consider is your loan profile. How much debt do you have? Have you opted for personal loans or home loans or are you still repaying your student loans? Remember, if you die, your family will have to repay your loans, which can be very taxing for them. Thus, choose a term life insurance cover that is large enough to cover your loans. If you die, your family can use the sum assured to repay the loans without any difficulties.
- The ages of your children
Your children are very precious and you do everything in your power to give them a good life. But what would happen if you died unexpectedly? Who would pay for their education and ensure they have a smooth and happy life? To guarantee your children a safe and happy future, you need to get long-term insurance coverage that will pay for all their needs, even in your absence. If your kids are young, you will need a larger coverage amount to secure all their needs, so keep this in mind at all times.
- Future financial requirements of the family
Whether you have a sibling whose marriage you have to pay for, or you have to buy a house for your elderly parents, you need to keep the financial goals of your family in mind when you look to freeze in on your term life insurance coverage amount. The amount you choose should be large enough for your family to meet all the financial goals if something happens to you and your income stops. Your loved ones should never have to compromise on their lifestyle after your demise, so choose a term insurance plan that can comfortably help them handle their finances in your absence.
- Your budget
While it is normal for everyone to want to get the highest possible coverage amount under their term life insurance policy, it is also important to keep the budget in mind. A plan with a high coverage amount will be more expensive. You should use a term insurance calculator to understand how much your plan will cost. This will help you to choose the perfect policy that fits your budget and keeps your family protected wholesomely.
The final word
Life insurance requirements are people-specific. A plan that suits your best friend may not suit you well. Therefore, keep all the points mentioned above in mind and calculate the term insurance needs of your family. Once you do the math, you will know what the ideal coverage amount should be. Get a proper term insurance plan from a trusted insurance provider and keep the financial prospects of your family safe and protected for a long time.
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