Term insurance is the simplest form of life insurance that can act as a financial cushion for the family should the policyholder meet with an untimely death in the future. It provides a higher sum assured to your loved ones to meet their daily needs as well as achieve their bigger life goals even in your absence.

However, in life you go through various stages: you get married, have kids, and buy a new home or a car and start saving for the marriage and education of your children. Therefore, it is important that your insurance policy also factors in your dynamic financial needs and expenses as you advance through your life.

What Is Adequate Coverage?

There is no size fits all, when it comes to how much term insurance cover is enough. If you go by popular opinion, you might end up underestimating your future earnings and hence opting for a lower sum assured. Such a decision could leave your loved ones financially dependent on others upon your demise. This is why you should do some math using the term insurance calculator and understand how much coverage would suffice for you and your family’s requirements. Here is how to go about it:

1.Compute The Needs Of Those Dependent On You

Whether it is the higher education of your children, your spouse’s retirement needs, or yearly household expenses to maintain your standard of living, all these expenses are essential to help your loved ones lead a comfortable life when you are not around. Add the cost involved in these as well as any liabilities such as a loan to buy a home or a car that you have taken recently. Remember to take the rising inflation rate into account as this may impact higher education costs as well as the healthcare expenses of your parents, spouse, or children in the next few years.

2.Evaluate Your Current Savings

You might be investing your money in fixed deposits, mutual funds, government-funded schemes, or mutual funds etc.  These are your savings and your family will have ready access to this money should you meet with an emergency. Sit down and take stock of the wealth you have accumulated so far.

3.Arriving At Your Life Cover Needs

 Now subtract your savings from your estimated future expenses to reveal the term insurance cover that you should buy. Review this cover periodically to make sure it aligns with the changing needs of your family. As your family grows, your expenses might increase and so does your income. Your savings will grow and you might require lesser coverage as you age. Depending on your needs, you can either break your life insurance into multiple policies or terminate it altogether.

Conclusion

It is important to keep your financial priorities in mind while also staying aware of where you stand at the present when choosing a term cover. Comprehensive term insurance plans available on Finserv MARKETS allow you to customize your policy as per your unique requirements. You can also use the term insurance calculator to zero upon pocket-friendly premiums that fit your budget and give your family a stable financial future that they would be thankful for!