Term Insurance Cover Calculator
Not a thumb rule. This calculator prices your family’s actual needs: the income they would lose, the loans they would carry, and the goals they would still have to fund.
The method: income replacement, properly discounted
The cover your family needs is the money that would let them maintain their life without your income. This calculator computes it in four steps: the present value of the income you would have brought home for the chosen number of years, plus loans that must be cleared immediately, plus large future goals like children’s education, minus investments the family already has and cover already in force.
Why present value, and why a "real" rate
A claim is paid as a lumpsum that the family invests and draws down. Because that lumpsum earns returns while inflation erodes it, the right discount rate is the real return: investment return minus inflation. A conservative 2% to 3% real rate is realistic for a family investing safely; using 0% is the most conservative choice and produces the largest cover.
Reading your number
The result is rounded up to the nearest ₹25 lakh because insurers sell cover in round slabs. The note under the result also expresses your figure as a multiple of income. Advisors’ shorthand of 10 to 15 times annual income usually lands in the same zone, but your number is better: a person with a ₹80 lakh home loan and two young children needs far more than a debt-free person with grown children on the same salary.
What this calculator deliberately ignores
It does not quote premiums, because premiums depend on age, health, smoking status and insurer. It also excludes the house your family lives in from assets, since they should not have to sell it. Term insurance is the cheapest way to buy pure cover; a healthy 30-year-old typically pays roughly ₹10,000 to ₹15,000 a year per crore of cover, but get live quotes for your profile.
What "a pot that pays your salary for 20 years" means
The biggest number in the breakdown is not 20 × your salary. If your family received ₹12 lakh × 20 = ₹2.4 crore upfront, they would have too much, because a lumpsum sitting in safe investments grows while they spend it. So the calculator asks the sharper question: what is the smallest pot which, invested safely, lets the family withdraw one year’s income every year and hits zero exactly at year 20? Mathematically each future year’s salary is discounted back: dividing year t’s income by (1 + growth)ᵗ and adding up all the years. At 3% growth above inflation, replacing ₹12 lakh a year for 20 years needs about ₹1.79 crore, not ₹2.4 crore. Set the growth field to 0 if you want the most conservative answer, and the pot becomes the full 20× salary.
Worked example: two people, same salary, very different cover
Two colleagues each earn ₹12 lakh. The first is 32 with a ₹60 lakh home loan, two children under 5, and ₹15 lakh of investments: the calculator suggests around ₹2.75 crore. The second is 48, debt-free, children employed, with ₹1.2 crore invested: the number falls near ₹75 lakh. A thumb rule of "10× income" would have told both to buy ₹1.2 crore, over-insuring one and dangerously under-insuring the other. Personal arithmetic beats slogans, which is the entire purpose of this page.
When to recalculate
Re-run this calculator after every major life event: a home loan (add it to liabilities the day it is sanctioned), a child’s birth (extend the support years and add education goals), a big jump in income (lifestyle expands with it), or a large inheritance (assets reduce the need). Term insurance can usually be topped up with a new policy rather than modifying the old one, and buying the increase young keeps the premium low.
Frequently asked questions
How much term insurance do I need?
Enough to replace your income for the years your family needs it, clear all loans, and fund fixed goals, after counting existing assets and cover. The calculator above computes exactly this and rounds it to a practical policy size.
Is 1 crore of cover enough?
For many young earners it is not. ₹1 crore invested at a 3% real return replaces a ₹12 lakh annual income for only about 9 to 10 years. If your family needs 20 years of support plus loan repayment, the requirement is usually higher.
Should I include my house in existing assets?
No, if your family will live in it. Count only assets they could actually liquidate: deposits, funds, stocks, a second property. That is why the calculator labels the field the way it does.
Term plan or endowment or ULIP?
For pure protection, term insurance gives the largest cover per rupee of premium by a wide margin. Investment-linked policies mix insurance with (usually expensive) investing; most planners suggest buying term cover and investing the difference separately.