Term Insurance Cover
Human Life Value based term insurance cover recommendation.
About the Term Insurance Cover
The Term Insurance Cover computes the right term-insurance sum assured using the Human Life Value (HLV) method — the standard actuarial framework that quantifies the present value of your future earnings to ensure your dependants maintain their lifestyle if you're not around. Indian households are dramatically underinsured: average life cover is 2-3× annual income, while the ideal benchmark is 12-15×.
How the Term Insurance Cover works
- Enter your current annual income, expected income growth, working years remaining and family's annual expenses.
- The calculator computes the present value of your future earnings — adjusted for inflation and your discount rate.
- It adds outstanding liabilities (home loan, car loan) and major future goals (children's education, marriage) to arrive at the required cover.
- Existing investments and other life cover are subtracted to give the gap-cover you should buy today.
Inputs explained
Formula
HLV = Σ [annual income × (1 + g)^t / (1 + d)^t] for t = 0..working years Cover = HLV + liabilities + major goals − existing cover where g = income growth, d = discount rate.
Worked example
A 32-year-old earning ₹15 LPA with 28 years of work, a ₹60L home loan and two young kids typically needs ₹2.5-3 Cr of term cover. Pure-term premiums run ₹15-25k/year for non-smokers in good health.
India-specific notes
- •Term-insurance premiums are 80C-eligible (under old regime) up to ₹1.5L per year combined limit.
- •Claim-settlement ratio (CSR) matters more than premium — IRDAI publishes annual CSR; aim ≥98%.
- •Riders worth adding: accidental death (cheap), critical illness (moderate), waiver of premium on disability.
- •Buy at the youngest age possible — premiums are locked at issue age for the policy lifetime.
Tips to maximise this calculator
- →Don't mix insurance and investment — pure term + separate mutual funds outperforms ULIPs and endowments by 3-4× over 25 years.
- →Disclose all medical conditions and smoking honestly — claim repudiation on non-disclosure is the #1 reason claims fail.
- →Increase cover at major life events: marriage, child birth, home loan — most insurers allow it without fresh medicals up to age 40.
Common mistakes to avoid
- ✕Buying ULIPs or endowment plans for "tax saving + insurance" — neither does well.
- ✕Relying solely on employer cover — disappears the moment you switch jobs.
- ✕Underbuying because premium "feels expensive" — ₹20k/year for ₹3 Cr cover is the cheapest contract in personal finance.
Glossary
- Term insurance
- Pure life cover with no maturity value — pays sum assured on death within the policy term.
- HLV
- Human Life Value — present value of your future income contribution to family.
- Sum assured
- Lump sum paid to nominees on the insured's death.
- CSR
- Claim Settlement Ratio — % of claims paid out by the insurer (published yearly by IRDAI).
Frequently asked questions
Is the Term Insurance Cover free to use?
Yes. The Term Insurance Cover is free, runs in your browser and never stores personal data.
Are the assumptions India-specific?
Yes. We use INR, Indian inflation and India-specific rates (PPF, EPF, FY 2026-27 tax slabs where applicable).
Is this investment advice?
No. This tool is for education. Consult a SEBI registered advisor before investing.