Term insurance is the cheapest and most honest form of life insurance because it only pays on death -- no investment component, no bonus, no surrender value.
About this calculator
Term insurance is the cheapest and most honest form of life insurance because it only pays on death -- no investment component, no bonus, no surrender value. The question it answers is simple: if you die tomorrow, will your family have enough money to replace your income for the rest of their lives and clear your debts? This calculator gives a specific rupee answer.
The human life value method discounts your future after-tax income back to today at a conservative rate, producing a present value of everything your dependents would lose if you died this year. That is the economic value of your life. On top of that, add any outstanding liabilities -- home loan, car loan, personal loan -- because those do not disappear when you die. Subtract the liquid assets your family already has. The difference is the cover they truly need, and the gap from whatever term cover you already hold is your shortfall.
Most Indians are under-insured by a factor of three to five. Employer group life cover is rarely more than two years' salary and disappears the day you leave. The target should be 15-20 times your current annual income as a minimum, with the HLV method acting as a sanity check for higher earners whose future income grows substantially. Term insurance is cheap in your thirties (roughly 8,000-12,000 premium for 1 crore cover till 60); the price doubles every decade, so lock the cover early. See [[life-insurance-premium]] for the premium side and [[emergency-fund]] for the liquid-reserve complement.
Common uses
- 32-year-old with 15 lakh income and two dependents checking if 50 lakh cover is enough
- Home-loan borrower verifying that cover clears the liability plus replaces income
- Dual-income couple sizing the cover for the higher earner
- Freelancer without employer group life planning their first term policy
- Sanity-checking existing cover after a big income jump
Frequently asked questions
How much term insurance do I need?
A quick rule is 15-20 times your current annual income. A more accurate method is human life value: the present value of your future income until retirement, plus outstanding liabilities, minus current liquid assets. This calculator runs both and uses the larger number.
What is the human life value approach?
It discounts your future income from today until retirement back to the present at a conservative rate. This produces the rupee value of your economic contribution to your family, which a term policy should replace in one lump sum.
Is employer group life enough?
Rarely. Employer group life is usually 1-3 years of salary and terminates the day you leave. Use it as a supplement, not as your primary cover. A personal term policy follows you across jobs and is portable.
Should I buy term insurance or traditional life insurance?
Term insurance is strictly cheaper for the same death benefit because it has no savings or investment component. A 50 lakh term cover costs 8-12k per year; a 50 lakh endowment or ULIP costs 5-10 lakh per year. Always buy term for the protection need and invest the difference separately.
Until what age should I buy term cover?
Until you stop being economically productive, which is usually your target retirement age. Buying cover past 70 is rarely useful and extremely expensive. Most policies offer cover till 65, 70 or 75 -- pick the age by which your dependents will be financially independent.