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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.

By: Manoj Aswani | 
Read Time: 1 minute, 7 seconds | 
Last Updated: 24-02-2022
How much Sum Assured / cover should I take in a term plan?

The amount of Life Insurance coverage you need will depend on many factors such as:

  • How many dependents you have?
  • What kind of lifestyle you want to provide for your family in case of your untimely death?
  • How much money will be needed for your childrens' education?
  • What your investment needs are?
  • How much can you afford to pay?

As a general practice, 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 affodable for the kind of cover which 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 thorughour the polciy term once you have taken the plan.

Compare your term insurance premiums.

Annual Income Sum Assured @ 15 times Sum Assured @ 20 times
1 Lakh 15 Lakhs 20 Lakhs
2 Lakhs 30 Lakhs 40 Lakhs
3 Lakhs 45 Lakhs 60 Lakhs
4 Lakhs 60 Lakhs 80 Lakhs
5 Lakhs 75 Lakhs 1.00 Crore
6 Lakhs 90 Lakhs 1.20 Crores
7 Lakhs 1.05 Crores 1.40 Crores
8 Lakhs 1.20 Crores 1.60 Crores
9 Lakhs 1.35 Crores 1.80 Crores
10 Lakhs 1.50 Crores 2.00 Crores
15 Lakhs 2.25 Crores 3.00 Crores
20 Lakhs 3.00 Crores 4.00 Crores
25 Lakhs 3.75 Crores 5.00 Crores
30 Lakhs 4.50 Crores 6.00 Crores

Manoj Aswani
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.

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