How much term insurance cover do you really need?
It’s one of the most misunderstood questions in financial planning. Many people buy a random ₹50L or ₹1Cr cover without analyzing their income, liabilities, or family’s future needs - and end up underinsured.
In 2025, choosing the right term cover means blending logic, data, and personal goals. A 30 - year - old earning ₹10L/year may need 15× annual income now but also inflation - adjusted cover for 30+ years.
This guide breaks down how to calculate your ideal sum assured using income multiples, the Human Life Value (HLV) method, and real - world scenarios. You’ll also learn how to adjust for debts, EMIs, kids’ education, and inflation so your family stays financially secure no matter what.
Use our free calculator at PolicyBachat to get your recommended cover instantly.
Why Choosing the Right Term Cover Matters
Term insurance is pure protection. Its only job is to replace your income if something happens to you.
If your cover is too low, your family’s lifestyle, home EMIs, and education goals suffer.
If it’s too high, you overpay for unnecessary coverage.
The goal is to find your “Protection Sweet Spot” - enough for all dependents’ future needs, but still affordable.
2025 Standard Formula (Income - Based Method)
Ideal Term Cover = 15× to 20× Annual Income
| Annual Income |
Ideal Cover Range |
Example |
| ₹5L |
₹75L - ₹1Cr |
Basic starter cover |
| ₹10L |
₹1.5Cr - ₹2Cr |
Mid-level protection |
| ₹20L |
₹3Cr - ₹4Cr |
Ideal for higher dependents |
| ₹40L+ |
₹6Cr - ₹8Cr |
Comprehensive, with lifestyle buffer |
Adjust based on age, liabilities, and future goals.
Human Life Value (HLV) Method (Recommended in 2025)
The HLV approach calculates your coverage as the present value of all future income your family would lose.
Formula:
HLV = (Annual Income - Personal Expenses) × Years to Retirement + Outstanding Loans + Future Goals
Example:
- Income = ₹12L/year
- Personal Expenses = ₹3L/year
- Years to Retirement = 30
- Outstanding Loan = ₹25L
- Children’s Education = ₹15L
HLV = (₹12L - ₹3L) × 30 + ₹25L + ₹15L = ₹310L = ₹3.1Cr Ideal Cover
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Factors That Influence Your Term Cover
| Factor |
Impact |
Example |
| Age |
Younger = higher years of dependency |
30 yrs -> 30 - 35 years cover |
| Dependents |
More dependents -> higher cover |
Kids, spouse, parents |
| Debt & EMIs |
Add all loans (home, car, personal) |
₹25L home loan + ₹10L car = +₹35L |
| Lifestyle & Inflation |
Add 5 - 6% annual inflation buffer |
₹1Cr today ≈ ₹2Cr in 15 yrs |
| Future Goals |
Education, marriage, retirement |
₹25L+ in goal value |
Age-Wise Coverage Guidelines 2025
| Age Bracket |
Recommended Term Cover |
Typical Policy Term |
| 25 - 30 yrs |
20× annual income |
35 - 40 yrs |
| 31 - 40 yrs |
15 - 18× annual income |
25 - 30 yrs |
| 41 - 50 yrs |
10 - 12× annual income |
15 - 20 yrs |
| 51 - 60 yrs |
5 - 8× annual income |
10 - 15 yrs |
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Married, Single, or Parents - Who Needs How Much?
| Life Stage |
Coverage Logic |
Example |
| Single with loans |
Income replacement + debts |
₹50L - ₹75L |
| Married (no kids) |
Add spouse’s 10 - year lifestyle cost |
₹1Cr - ₹1.5Cr |
| Married with kids |
Add education + long - term living |
₹2Cr - ₹4Cr |
| With dependent parents |
Include elder care + medical buffer |
₹3Cr - ₹5Cr |
Inflation Adjustment Tip
If you’re 30 and buying 30 - year cover:
₹1Cr today loses 60% value by age 60 (assuming 5% inflation).
Start with ₹2Cr+ now, or choose a “Increasing Cover Term Plan” that rises 5 - 10% annually.
Checklist Before Finalizing Cover
- Cover = (Income - Expenses) × years to retirement
- Add all liabilities + goals
- Add inflation adjustment buffer (30 - 50%)
- Choose cover ≥ ₹1Cr minimum for family stability
- Review cover every 3 - 5 years as income rises
Local Insights for Hyderabad
- Avg. income in Bengaluru: ₹10L/yr
- Avg. term cover bought: ₹75L
- Most common mistake: Underestimating inflation and future expenses
- Avg. premium for ₹1Cr, 30-year term (age 30): ₹9,500/yr
- Top insurers by claim ratio: LIC, HDFC Life, ICICI Prudential
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FAQs
What is the best method to calculate term cover?
Use Human Life Value (HLV) or 15 - 20x income rule with adjustments.
Is ₹1Cr term insurance enough in 2025?
Usually not - inflation - adjusted needs often exceed ₹1.5 - ₹2Cr.
Should I add loan amount separately?
Yes, add all outstanding debts over your income - based cover.
How often should I review my cover?
Every 3 - 5 years or after major life events (marriage, kids, new loans).
Can I increase cover later?
Yes, via top - up options or new policies (subject to underwriting).
What policy term should I choose?
Until age 60 - 65, ideally covering your earning years.
Does inflation affect coverage?
Yes - ₹1Cr today will not equal ₹1Cr value after 20 - 30 years.
Is group term cover from employer enough?
No - it ends with your job and rarely exceeds 3x annual salary.
Can NRIs buy large term cover in India?
Yes, many insurers offer ₹1 - 5Cr cover for NRIs with INR payment.
What’s the best tool to calculate term cover online?
Use PolicyBachat’s Term Insurance Calculator - accurate and instant.
Customer Reviews
- “Used PolicyBachat calculator - found I was underinsured by ₹1.2Cr.” - Ravi Menon
- “Simple step-by-step math made it easy to set my cover.” - Sneha Iyer
- “Loved the inflation-adjusted guide - very practical.” - Vikram Desai
- “Got ₹2Cr cover in 10 minutes - clear instructions.” - Kavya Sharma
- “Perfect for first-time term insurance buyers.” - Rajesh Rao
- “Helped me balance EMI, family, and insurance needs smartly.” - Meera Nair
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PolicyBachat Advantage
- Free Human Life Value calculator.
- Compare 20+ insurers instantly.
- Auto - adjusts for age, income, and inflation.
- Free Claim Assist after purchase.
- 100% digital - get your policy PDF instantly.
PolicyBachat Tip
Don’t pick your cover by what sounds big. Pick what actually replaces your income and secures your family for decades.
Tax Benefits (Section 80C & 10(10D))
Premium up to ₹1.5L deductible under Section 80C.
Payouts (death/maturity) fully tax-free under Section 10(10D).
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