How much insurance should you take

  • Posted By : reliancesmartmoney.com
  • Friday Jan 11, 2019

To put a numerical value on your life’s worth might seem like a morbid thing to do. However, it is a vital factor to consider when you  are looking for life insurance. While deciding the cover of your policy, it is important to remember the objective of the coverage in the first place. You opt for a life insurance policy to provide support to your family and dependents, in case something happens to you. Therefore, it is essential that your life cover is adequate for your family’s financial safety. It should be enough to settle all your dues as well as generate enough income to ensure your family maintains the same standard of living as you would have provided them. 

For the protection of your family’s future, you’ll need to make a smart decision today. You can consider the following factors when estimating the life insurance cover you may need to meet your objective. 

Your current income level

The most basic rule is to calculate your yearly income and multiply it into 10 for your insurance coverage. However, with the ever-increasing rate of inflation, it is wiser to opt for at least 20 times your annual income. Hence, if you are presently making Rs. 5 lakhs a year, it would be smart to choose a life insurance policy that offers a cover of Rs. 1 crore. Such a cover might be able to meet your family’s monthly expenses and maintain their standard of living in your absence too. 

Your outstanding financial liabilities

Outstanding debts and loans are essential things to consider when estimating life insurance cover. A home loan or a business loan becomes a burden in the event of demise, as family members might have a difficult time paying EMIs in addition to household expenses. Include such financial liabilities in your cover too, so that your insurance can take care of it. 

Your financial goals

You may have various financial goals in life. These could range from building a fund for your child’s higher education or saving for your child’s wedding. These expenses will still be around even when you’re not. Include such financial goals  in your cover, so that your children do not have to compromise on their future in your absence. Ensure you consider the rate of inflation when doing so. 

Your age

Your age at which you buy the policy is also crucial in deciding the quantum of the insurance. This is because the premium increases with the advancing age of the life assured. With that logic, you could buy the same insurance sum assured, at a lower premium, when you’re younger, than you would have, at a later stage. 

Once you’ve carefully considered all these factors, go online and look for a good insurance policy. Reliancesmartmoney.com offers you multiple options to choose a plan right for your needs. 

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