We recently conducted a Financial Planning workshop at a large IT company in Gurgaon. During the interaction, we conducted a quick survey and discovered that over 90% of the audience had no life / term insurance.

What that basically  means that if they were to suddenly die today, their dependents would receive no money !

Before you decide how much insurance, you first need to understand why you need insurance.

Most people buy insurance to save on tax and to get some residual retirement income. Infact, its not uncommon to find people with multiple LIC policies. Very few of them have the most essential and basic form of insurance, popularly known as term insurance.

An insurance policy is not meant for you. Its meant for your loved ones and to provide them with a lump sum of money incase something were to happen to you. Its not very popular on account of 2 reasons:

  • Insurance agents don’t like to sell them because the premiums on these are very low and hence so are their commissions
  • People think its a waste of money because you don’t get ‘anything back’ at the end of the term

Don’t fall into this trap. Get a term insurance policy if you really care for your family.

Now coming to how much of term insurance you should ideally have.

These days, its very common to see ads for ‘Get a 1 crore term insurance for Rs 6000 or so’. Now Rs 1 crore is a lot of money of today – But will it still be a lot of money 10 or 20 years down the line. Will it be enough to cover your home loan of Rs 1.5 crores and pay for your children’s education if your spouse is not working.

Ideally, you should avail a cover of 20 times your gross salary as term insurance. So if you are earning Rs 10 lakhs as gross annual salary, you can get a term insurance plan of Rs 2 crores.

Get the maximum cover today or as much as your financial situation permits.


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