How Much Life Insurance Do You Need?
A simple way to estimate the life cover your family may need, using income, loans and dependents.
The Income-Replacement Approach
A widely used starting formula: multiply your annual income by roughly 10 to 15, adjusted for your age (younger buyers often lean toward the higher end, since more years of income need replacing) and the number of dependents relying on that income.
Add Outstanding Loans
Home loans, vehicle loans and other significant debts are commonly added on top of the income-based figure, so your family isn't left managing loan repayments in addition to lost income.
Subtract What You Already Have
Existing life cover (personal or employer-provided group cover) and liquid savings specifically earmarked for this purpose can be subtracted from the total, since they already partially meet the need.
Adjust for Specific Goals
If you have a specific future cost in mind — a child's higher education, a wedding, a spouse's retirement — it can help to add a rough estimate of that cost on top of the income-replacement figure, rather than assuming income replacement alone covers every future goal.
A Simple Example
Illustrative only: Someone earning ₹12 lakh a year, with a ₹30 lakh home loan outstanding and ₹5 lakh in existing cover, using a 12x income multiple, might arrive at: (₹12 lakh × 12) + ₹30 lakh − ₹5 lakh = ₹1.69 crore as a starting estimate. The Life Insurance Requirement Calculator on this website lets you run your own numbers.
Frequently Asked Questions
No, it's a commonly used starting point, not a fixed formula. Your actual requirement depends on your specific dependents, goals and existing assets.
Yes — as you approach retirement, fewer years of income need replacing, so the appropriate multiple and total cover often reduce over time; periodic review is worthwhile.
Have a Question About Your Own Situation?
General guides are a starting point — share your specifics for a considered answer.