MyInsuranceClub > Ask an Expert > ULIP > Right now I am having four different ULIP policies

Sai Kumar

Question

Dear Sir/Madam, Right now I am having four different ULIP policies from four different companies. All Policies are more than 5+ years old. The total sum assured of all the policies are 4, 75,000/- and my annual income at present is 9, 00,000/- Recently I came to know that sum assurance of the policies should not cross 20% of his annual income, for salaried person. Please confirm me. Sai Kumar

Asked By: Sai Kumar
On: 31st Jul 2012 4:08 PM
Answered Within: 7 Hours

MIC Expert

Answer

Hi,

Who in the world has told you that your Sum Assured should not be more than 20% of your Annual Income?? You have taken a Life Insurance Policy so that if something unfortunate happens to you, then your family would not have any financial crunch due to your absence. So, by that logic, you earn Rs 9 lakhs per annum. And if something were to happen to you, your family would not have any financial crunch for the rest of their lives with an amount equal to 20% of Rs 9 lakhs, i.e. Rs 1,80,000 ONLY??

There are many ways to calculate your ideal Insurance Amount. For more information on the same, please read How Much Insurance Coverage Should One Have?

However, for Simple Calculation,

Between 20 years – 29 years, Life Insurance Coverage should be at least 20 times Annual Income
Between 30 years – 39 years, Life Insurance Coverage should be at least 15 times Annual Income
Between 40 years – 55 years, Life Insurance Coverage should be at least 20 times Annual Income10 times Annual Income
And for ages more than 55 years, Life Insurance Coverage should be at least 5 times Annual Income

Thus, depending on your age, you can simply calculate How Much Life Insurance Coverage you must have. Hope this clarifies.

Answered By: MIC Expert
On: 1st Aug 2012 12:07 AM

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