Regarding financial security, one of the common questions people ask is how to accurately determine the amount of life cover needed. Life insurance is not just something you need to tick off on your list of things to do—life insurance is a promise that your family can continue their life of dignity and security after you’re gone, even if you’re not around. This is how you get overwhelmed by trying to determine the amount of life cover you need.
Let's face reality—it's difficult to pinpoint an exact figure. You see, the life cover you need depends on what you earn, what you hope for in life, and those you support. Let's begin with something extremely basic.
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https://mintwise.in/investments-calculator/life-insurance.aspx
Underinsurance is actually much more common than people imagine. Many people select a random coverage amount without aligning it to real-life expenses such as EMIs, children's education, or daily household expenses. Overinsurance, on the other hand, can unnecessarily strain your monthly budget.
By properly calculating your requirement for life cover, you achieve a very important balance: your family is secured financially, without stretching your finances today.
1. Your Annual Income
A common rule of thumb is 10–15 times your annual income. But this is just a starting point, not a final answer.
2. Outstanding Liabilities
Include home loans, personal loans, car loans, and credit card dues. These obligations don’t disappear if you’re not around.
3. Family’s Monthly Expenses
Estimate how much your family needs each month and for how many years they will depend on this support.
4. Future Goals
Children’s education, marriage expenses, or dependent parents’ healthcare—all these future costs should be factored in.
5. Existing Savings & Insurance
Subtract existing investments, savings, and any current life insurance cover to avoid duplication.
Here’s a practical way to approach it:
Life Cover Needed = (Annual Expenses × Number of Years) + Liabilities + Future Goals − Existing Assets
This approach ensures your life cover is realistic, personalized, and meaningful.
Manually, this can become a long and labor-intensive process, both in terms of time as well as potential for error. That's what digital media can assist with, as platforms like Mintwise make this process much simpler by enabling an individual to assess their income, spending, debt, and goals all in one location.
No more guessing, simply clarity that is backed by logic.
Making coverage decisions based on multiple income factors
"One of the most sensible financial decisions that one can make is actually taking the time to work through what sort of life cover is really required. It’s not about being fearful; it’s actually being forward-thinking. A well-thought-out-life-cover figure is essentially ensuring that your family’s lifestyle, goals, and dreams remain protected regardless of what happens. For someone looking for a framework that can help make the process of planning for life insurance in a confident way, Mintwise is here for you."
https://mintwise.in/contact-us.aspx
The ideal way is to consider income, liabilities, future goals, ongoing expenses, and subtract existing savings and insurance.
Not always. While it’s a common benchmark, individual responsibilities and goals often require higher coverage.
Yes. Homemakers contribute significant economic value, and their absence can lead to increased household costs.
You should review your life cover after major events like marriage, childbirth, home purchase, or job change.
Yes. Reliable platforms like Mintwise use structured inputs to help estimate life cover more accurately and efficiently.
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