Term Insurance Calculator: Age 40, salary Rs 1 lakh, goals and liabilities Rs 50 lakh each; insurance cover Rs 20 lakh; what will be term insurance amount? Know here
Term Insurance Calculator: Term insurance cover helps a family achieve financial goals and run daily expenses if the policyholder dies during the policy term. If one buys a term insurance policy early in their life, there are high chances of getting it and they will have to pay a lower premium compared to someone who purchases it in their late 30s or early 40s.
Term Insurance Calculator: Term insurance is a form of life insurance that provides financial protection to family members or the nominee(s) in case the insured person dies. Term insurance provides a large insured amount at a premium that can be paid yearly or monthly. If the term insurance holder dies during the policy period, the nominee gets the insured amount. Financial experts advise buying a term insurance policy early in life. The reason is there are higher chances of getting a term insurance policy if someone purchases it at 25 than at 40, plus the premium is lower.
How much should be term insurance cover
The term insurance amount can be 10 to 20 times of one's annual income. Plus, it should cover expenses such as financial goals, loans, and other lifestyle expenses.
Term insurance calculation
In this write-up, through calculation, we will show what should be the term insurance amount if one is 40 years old drawing a Rs 1 lakh monthly salary, with goals and liabilities of Rs 50 lakh each, and existing life cover of Rs 20 lakh.
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Calculation Courtesy: Max Life Pension Fund Management
Term insurance conditions
Age: 40
Current salary: Rs 1 lakh
Expenditure: Rs 50,000
Goals: Rs 50 lakh
Liabilities: Rs 50 lakh
Current Savings: Rs 10 lakh
Existing Life Cover: Rs 20 lakh
Recommended sum assured
At least 2 crore
How term insurance amount has been calculated
10 times of annual income plus liabilities plus goals minus the existing cover.
How term insurance amount has been calculated
In this case, {10XRs 12 lakh (annual income)+ Rs 50 lakh (liabilities) + Rs 50 lakh (goal)} - Rs 20 lakh (existing insured amount)
Should we consider existing savings for assessing term insurance amount?
Existing savings are considered to be the emergency fund and hence not accounted for in the required cover.
Recommended age for term insurance policy
The coverage is recommended to age 75 to make sure that the policy is future proof and takes care of liabilities to be discharged post retirement also, but premium payable till age 60 only.
Expected premium
Premium applicable for male aged 40 years, non-smoker, for cover up to age 75 (35 years), and premium payable till age 60 (20 years), and sum assured of Rs 2 crore, will be Rs 51,546 + taxes.