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How much Sum Assured/cover should I take in a term plan?

Know how to calculate the amount of life insurance cover you should have. Know the factors one should consider and decide the total term insurance cover for yourself.

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2 mins 7 secs
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Last Updated - September 6, 2023
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The amount of Life Insurance coverage you need will depend on many factors such as:

  • How many dependents do you have?
  • What kind of lifestyle do you want to provide for your family in case of your untimely death?
  • How much money will be needed for your children’s education?
    What your investment needs are?
  • How much can you afford to pay?
  • As a general practice, the calculation for Sum Assured in a Term Insurance policy is – Minimum Sum Assured = Annual Income x 10 times + Loans/Liabilities.

    If you can afford the premiums (which are pretty affordable for the kind of coverage you get), we recommend that you go in for 15 to 20 times your annual income. Keep topping up with additional covers in case there is a quantum jump in your income. Start taking life cover as early as possible in your earning life – the premiums are really low when your age is less – and they remain the same throughout the policy term once you have taken the plan.

Compare your term insurance premiums.

Annual IncomeSum Assured @ 15 timesSum Assured @ 20 times
1 Lakh15 Lakhs20 Lakhs
2 Lakhs30 Lakhs40 Lakhs
3 Lakhs45 Lakhs60 Lakhs
4 Lakhs60 Lakhs80 Lakhs
5 Lakhs75 Lakhs1.00 Crore
6 Lakhs90 Lakhs1.20 Crores
7 Lakhs1.05 Crores1.40 Crores
8 Lakhs1.20 Crores1.60 Crores
9 Lakhs1.35 Crores1.80 Crores
10 Lakhs1.50 Crores2.00 Crores
15 Lakhs2.25 Crores3.00 Crores
20 Lakhs3.00 Crores4.00 Crores
25 Lakhs3.75 Crores5.00 Crores
30 Lakhs4.50 Crores6.00 Crores
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Author

Manoj is the co-founder and COO of MyInsuranceClub. He has experience in Financial Services, Internet, Insurance and Outsourcing business. He has done his Post Graduation from XLRI, Jamshedpur.