Term Insurance Calculator: How Much Cover Do You Need?
The life cover your family would need if you died tomorrow: their spending, your loans and their goals, less what you would leave. No phone number, no quotes.
A family spending ₹6 lakh a year who would need support for 20 years, with a ₹30 lakh loan, a ₹20 lakh child's goal 12 years away and ₹5 lakh saved, needs about ₹1.53 crore of cover at 6% inflation and a 7% return on the payout: round it up to ₹1.55 crore. Enter your own numbers below.
The words on this page, explained simply
New to this? Here is what each term means, in plain English.
- Term insurance
- Pure life cover for a set number of years. If you die during the term, your family gets the cover amount; if you outlive it, nothing is paid back. That is why it costs a fraction of an endowment plan.
- Life cover
- The lump sum the insurer pays your family if you die while the policy is running.
- Inflation
- Prices rising over time. At 6% inflation, something that costs ₹100 today costs about ₹179 in ten years, so the same rupees buy less.
- In today's rupees
- A future amount shrunk back by inflation, to show what it would buy today. At 6% inflation, ₹1 crore in 20 years buys about what ₹31 lakh buys now.
- Endowment plan
- A policy that mixes life cover with savings and pays a maturity amount if you survive. The premium is many times a term plan's for the same cover.
Term insurance pays your family a lump sum if you die during the policy term. The question is how big that sum must be. This calculator answers it the way a careful adviser would: what your family spends each year, for how many years they would need it, the loans they would have to repay, the big goals still ahead, less any life cover and savings you already have.
It runs in your browser. Nothing you enter is sent anywhere, and nobody will call you.
How the cover is worked out
The payout would be invested and drawn down. Each year your family takes out what they spend, and that amount rises with inflation. The calculator finds the lump sum that lasts exactly the years you enter, at the return you expect the money to earn. A goal, such as a child's college fees, is costed in today's rupees and grown with inflation to the year it falls due.
Then it adds outstanding loans, which your family would have to clear, and takes off the life cover you already have and savings they could use. Leave out your employer's group cover if you might change jobs.
The 10 to 15 times income rule
You will often read that cover should be 10 to 15 times your yearly income. That is a shortcut. It ignores how long your family needs support, your loans and your savings. The calculator shows your answer as a multiple of income too, so you can see how far the shortcut is from your own case.
Insurers also cap cover at a multiple of income, and the multiple falls as you get older. Each insurer sets its own limits, so check with the one you choose.
Term plan vs endowment
An endowment or money-back plan bundles life cover with savings and costs far more. The second calculator compares the two using premiums from your own quotes. For example, a term plan at ₹15,000 a year against an endowment at ₹1 lakh a year leaves ₹85,000 a year to invest. Invested for 20 years at 8%, that grows to ₹42.01 lakh, against an endowment maturity of ₹30 lakh. Use the maturity value in your own benefit illustration, not an agent's verbal estimate. The LIC maturity calculator works out the real return of an LIC plan.
Before you buy
Choose cover that runs until your family no longer depends on you, usually your retirement. Disclose your health and habits fully on the form: a claim can be turned down for anything you leave out. Check the insurer's record of paying claims on the claim settlement ratio page.
Key takeaways
- Cover = the family's spending for the years they need it + loans + goals − cover and savings you have.
- Work in today's rupees: set inflation and the return the payout would earn.
- A term plan plus investing the difference usually beats an endowment for the same cover.
Frequently asked questions
How much term insurance do I need?
Enough to replace what your family would lose: their yearly spending for the years they would need it, any loans, and big goals like education, less your savings and existing cover. For a family spending ₹6 lakh a year for 20 years with a ₹30 lakh loan, a ₹20 lakh goal and ₹5 lakh saved, that is about ₹1.53 crore.
Is 10 times my salary enough life cover?
Sometimes, but it is only a rule of thumb. It ignores your loans, your savings and how many years your family needs support. A young parent with a home loan often needs far more; someone with grown children and few loans may need less.
Should I include my home loan in the cover?
Yes, unless the loan already has its own cover that repays it on your death. Otherwise your family would have to repay it from the payout.
Until what age should term insurance run?
Until your family no longer depends on your income, usually your planned retirement age. Cover far beyond that costs more and protects little.
Is a term plan better than an endowment policy?
For the same cover, a term plan costs a small fraction of an endowment premium. If you invest the difference yourself, you usually end up with more than the endowment pays at maturity. The second calculator on this page shows the figures for your own quotes.