How Much Life Insurance Cover Is Really Required for Your Family?
Buying an arbitrary ₹50 Lakh or ₹1 Crore term plan without evaluating your Human Life Value (HLV) can leave your family severely underinsured against inflation, home loans, and children's future education costs.
1. The Standard Rule of Thumb: 10x to 15x Gross Income
The baseline financial benchmark is to hold a pure Term Insurance Sum Assured equal to at least 10 to 15 times your gross annual income. For example, if you earn ₹12 Lakhs/year, your minimum base term cover should be ₹1.2 to ₹1.8 Crores.
2. The Human Life Value (HLV) Calculation Formula
To estimate family financial protection requirements:
3. Factoring in 6% - 7% Inflation
A college degree costing ₹25 Lakhs today will cost ₹50 Lakhs in 12 years at 6% inflation. Your term insurance payout must provide enough capital for your nominee to generate monthly family income via safe fixed instruments while keeping the principal intact.
Recommended Action Checklist
- Estimate your Human Life Value using our educational calculator.
- Include all outstanding home loan and personal debt liabilities.
- Review life cover after major milestones (marriage, birth of child, buying a home).
Frequently Asked Questions
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Human Life Value (HLV) Calculator