How much term insurance to buy
A common starting point is 10 to 15 times annual take-home, then adjust for debts and dependants.
What it is
How much term insurance to buy is a topic most households meet at some point. The aim of this page is to name the parts, show the usual numbers, and list what the simple story leaves out.
How the money moves
Write down the cash that leaves your bank and the cash that returns. For market products the return is not guaranteed. For bank and small savings products the rate is stated, but inflation and tax still apply.
- Note the lock-in, if any.
- Note the fee or expense, if any.
- Note the tax rule that applies on exit.
A simple example
Take a monthly sum of Rs 10,000. Over 10 years that is Rs 12 lakh of your own money. What you hold at the end depends on the product: a bank rate, a notified small-savings rate, or a fund NAV that moves each day.
What people mix up
Past return is not a promise. A tax benefit is not the same as a good product. A high headline rate before tax can be a low rate after tax and inflation.
What to do next
Open the matching calculator on this site and change the inputs to your own numbers. If you want a person to look at a specific fund or policy, use the Ask us page. You will get a reference number.