Key idea
Enough to replace your income and clear your debts, so the people who depend on you are not left with a shortfall. A rule of thumb gets you close.
Life cover is meant to stand in for the income you would no longer provide. Too little leaves your family short; too much means paying for protection nobody needs. There are two common ways to size it.
Two approaches
| Method | How it works |
|---|---|
| Rule of thumb | Roughly 10 to 15 times your annual income |
| Needs-based Income to replace + loans + future goals, minus existing assets |
The rule of thumb is quick: someone earning ₹12 lakh a year might target ₹1.2 to ₹1.8 crore of cover. The needs-based method is more precise: add up what your family would need (years of living costs, the outstanding home loan, your children's education) and subtract what you already have saved.
The factor people forget
Cover should account for your liabilities, especially a home loan. A term payout that clears the loan and replaces income keeps your family in their home rather than forcing a sale. Review the figure when your income, loans, or family size change.
These are frameworks for thinking, not a prescription. The right cover for your family depends on your income, debts, and dependants, and the choice is yours.
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