A good life insurance policy can protect you from financial difficulties and provide assurances that your loved ones will be taken care of in the event of any mishap. Many a time people find it difficult to estimate the appropriate value of insurance they need.
Your life insurance needs change as your life changes. When you are young, you may not have much need for life insurance. However, as you take on more responsibility and your family grows, your life insurance needs increase. You should periodically review your needs in order to ensure that your life insurance coverage is adequate.
There are several simple methods that can be used to estimate the life insurance need of any person. These are rules of thumb and give you a broad idea of the amount of life insurance you should buy.
Income rule: The most basic rule of thumb is the income rule, which states that your insurance need should be around six to eight times of your gross annual income. For example, a person earning a gross annual income of Rs 100,000 should have between Rs 600,000 (6 x Rs 100,000) and Rs 800,000 (8 x Rs 100,000) in life insurance coverage.
Your life insurance needs change as your life changes. When you are young, you may not have much need for life insurance. However, as you take on more responsibility and your family grows, your life insurance needs increase. You should periodically review your needs in order to ensure that your life insurance coverage is adequate.
There are several simple methods that can be used to estimate the life insurance need of any person. These are rules of thumb and give you a broad idea of the amount of life insurance you should buy.
Income rule: The most basic rule of thumb is the income rule, which states that your insurance need should be around six to eight times of your gross annual income. For example, a person earning a gross annual income of Rs 100,000 should have between Rs 600,000 (6 x Rs 100,000) and Rs 800,000 (8 x Rs 100,000) in life insurance coverage.
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