Term Insurance Cover Calculator
Estimate the life cover you need: needs-based or human life value, method shown
| Step | Amount |
|---|---|
| Household expenses for 25 years (today's value) | ā¹1,34,32,332 |
| Add: loans outstanding | ā¹20,00,000 |
| Add: future goals | ā¹25,00,000 |
| Less: savings and investments | -ā¹5,00,000 |
| Less: existing life cover | ā¹0 |
| Cover needed | ā¹1,74,32,332 |
Runs entirely in your browser. Nothing you type or upload is sent to us or stored.
Results are estimates, not financial advice. Rates, charges and rules change, so confirm with your bank, post office or a financial adviser before you decide. Terms of use
How to Use
- Choose a method: needs-based (what your family would need) or human life value (the income they would lose).
- Enter your annual income. For needs-based, add the family's yearly expenses without you, the years they need support, loans, future goals and savings.
- For human life value, enter the years until you retire, the share of income you spend on yourself and taxes, and expected income growth.
- Adjust inflation and the return the family could earn on the payout, and add any existing life cover.
- The estimated cover, a rounded sum assured and the step-by-step working change as you type. Try both methods and compare them.
How much term insurance do you need?
A term insurance plan pays a fixed sum (the sum assured) to your family if you die during the policy term. It has no maturity value, which is why it's the cheapest way to buy a large life cover. The hard part is deciding how large. Too little leaves your family short, and too much means paying for cover you don't need. This term insurance calculator estimates the figure with two standard methods and shows every step, so you can see where the number comes from and change the assumptions. Treat it as a starting point for your own decision, not as advice.
Method 1: Needs-based
+ loans outstanding + future goals
ā savings and investments ā existing life cover
Household expenses rise with inflation every year, but the payout can be invested and earn a return. The calculator adds up each year's expenses for the years of support you choose, growing at the inflation rate and discounted at the return rate, counting each year's money at the start of that year:
Method 2: Human life value (HLV)
HLV is the value today of the income your family would lose: your income minus what you spend on yourself and pay in tax, growing each year until retirement, discounted at the return rate. Existing cover is subtracted. HLV ignores loans and goals, so it can come out lower or higher than the needs-based figure. Many people go with the higher of the two.
Worked example (needs-based)
Rahul, 35, earns ā¹12 lakh a year. His family would need ā¹6 lakh a year for 25 years. He has a ā¹20 lakh home loan, wants ā¹25 lakh (today's cost) set aside for his children's education, and has ā¹5 lakh in savings. He assumes 6% inflation and a 7% return on the payout.
| Step | Amount |
|---|---|
| 25 years of expenses, today's value | ā¹1,34,32,332 |
| Add: home loan | ā¹20,00,000 |
| Add: education goal | ā¹25,00,000 |
| Less: savings | āā¹5,00,000 |
| Cover needed | ā¹1,74,32,332 |
Rounded up, that's a sum assured of about ā¹1.75 crore, roughly 14.5 times his income. With the HLV method (30% of income for himself and taxes, 5% yearly growth, 25 years to retirement), the estimate is about ā¹1.69 crore. The two methods land close together here, which suggests the assumptions are sensible.
Choosing your assumptions
- Expenses: leave out your own spending and the EMIs (loans are added separately), but include rent if the family would have to pay it.
- Return: use a cautious, after-tax return the family could get from safe investments, such as FDs or debt funds. A high return makes the cover look smaller than it should be.
- Savings: count only money the family could actually use. Leave out the house you live in, and retirement money they'll need later.
- Employer group cover stops when you leave the job, so many people don't count it.
- Review the cover after marriage, a child, a new home loan or a big rise in income.
The usual rule of thumb, 10ā15 times annual income, is shown alongside for comparison. Your insurer will also decide how much cover it offers based on your income, age and health.