How Much Do You Need To Spend On Your Life Insurance


However, there are some guidelines that if followed would help one get an adequate life insurance. A simple method is to follow the thumb rule of having 10-12 times your annual earnings.

"This is a thumb rule used to calculate the amount of insurance required by an individual. The sum insured basically should be equal to an amount which, if invested, should fetch a regular income for the dependants of the insured so that they are able to maintain a lifestyle which they are used to. In case there are any liabilities, such amounts should be added to the amount of insurance required," says Rajesh Relan, MD, PNB MetLife India Insurance.

Financial Need Analysis Approach

Among other options there is ‘financial need analysis approach’ through which you can get an adequate life insurance. In this, the insurance takes care of all the specific needs of the individual. The basic objective of this approach is to provide adequate cover to the dependents’ needs in case if the breadwinner of the family dies.

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