How Much Term Insurance Cover Do You Need?
A simple method to size term life cover, what to check in a policy, and why term plans beat endowment policies for protection.
Term insurance pays your family a lump sum if you die during the policy term. It has no maturity benefit, which is why it is much cheaper than endowment or money-back plans for the same cover.
A simple way to size cover
Add up what your family would need if your income stopped:
- All outstanding loans, such as home loan and car loan.
- Your annual expenses multiplied by the number of years your dependants need support, for example 10–15 years.
- Future goals such as children's education and marriage.
Subtract existing assets such as savings and investments. A rough rule many advisers use is 10–15 times annual income.
Example
Annual income ₹10 lakh. A 12× rule gives ₹1.2 crore. If you have a ₹40 lakh home loan, make sure the cover is comfortably above that loan.
What to check before buying
- Claim settlement ratio and complaints history of the insurer.
- Policy term: cover until about age 60–65, when dependants no longer rely on you.
- Disclosures: state health, smoking and income truthfully; wrong information can lead to claim rejection.
- Riders: critical illness or accidental death cover can be added, but compare cost.
Buy early
Premiums rise with age and health conditions. Buying in your 20s or early 30s locks in a lower premium for the entire term.
Tax
Premiums qualify under Section 80C in the old regime, and the death benefit is generally tax-free for the nominee under current rules. Do not choose a policy only for the deduction.
Educational content, not insurance advice. Compare policies on official insurer or aggregator sites.
Frequently asked questions
Why is term insurance cheaper than other life plans?
It pays only on death during the term and has no savings or maturity component.
Can I have more than one term policy?
Yes, but disclose all existing policies when applying.
More guides
Calculators
Last reviewed: October 2026. General education, not financial advice.