India Term Insurance Calculator

The Human Life Value way to size cover

Term insurance is the cheapest, most honest form of life cover: pure protection, no investment component, a large payout if you die during the policy term and nothing back if you survive it. The hard question is how much cover to buy. This calculator uses the Human Life Value approach, which frames the answer around what your family would actually need if your income stopped tomorrow. It takes your annual income times a multiple, adds your outstanding loans, then subtracts the savings and existing cover your family could already fall back on. What remains is the gap a term plan should fill.

Working through a ₹15 lakh income

Take the default profile: ₹15 lakh annual income, a 15 times multiple, ₹50 lakh of outstanding loans, and ₹20 lakh of existing savings and cover. Income replacement comes to ₹2.25 crore. Add the ₹50 lakh of loans your family would need to clear, then subtract the ₹20 lakh they already have. The recommended cover lands at ₹2.55 crore.

Why I lean toward over-insuring slightly

Term cover is astonishingly cheap, especially if you buy young and as a non-smoker. The marginal premium to go from ₹2 crore to ₹2.5 crore is small, often a few thousand rupees a year, while the consequence of being under-insured is catastrophic for the people you leave behind. So when the number falls between two round figures, round up. Also revisit the cover at life events: a new home loan, a child, a jump in income. The 15 times multiple is a reasonable default, but a single earner with young children and a large mortgage may want the higher end, while someone near retirement with grown children and no debt needs far less.

Choosing the term and the riders

The cover amount is only half the decision; the policy term is the other half. Buy cover that runs until you expect to be financially independent, usually until you retire around 60 to 65, by which point your loans should be cleared and your children settled. Insuring well past that age simply pays for years when nobody depends on your income. A few riders are worth the small extra premium. An accidental death benefit rider boosts the payout if death is due to an accident. A critical illness rider pays a lump sum on diagnosis of a listed serious illness, which can cover treatment and lost income while you are alive. A waiver of premium rider keeps the policy in force without further premiums if you become permanently disabled. Skip the gimmicky add-ons and keep the structure simple. The single most important thing, more than any rider, is to disclose your health, smoking habit, income, and existing policies honestly on the proposal form. A claim rejected for non-disclosure defeats the entire purpose, and Indian insurers do investigate large early claims. Buy young, disclose fully, and the cover does exactly what it promises.

Is the term insurance payout taxable?

No. The death benefit from a term plan is exempt under Section 10(10D), so your nominee receives the full sum assured tax-free. On the other side, the premiums you pay qualify for a deduction under Section 80C, within the overall ₹1.5 lakh limit, if you are on the old tax regime. Under the new regime that 80C deduction is not available, but the payout stays tax-free either way.

Should I buy a return-of-premium plan instead?

Usually not. A return-of-premium term plan gives your money back if you survive, but it charges a much higher premium to do so, and the implied return on that extra premium is poor, often well below what a plain debt fund would earn. You are almost always better off buying a plain term plan and investing the premium difference yourself in a SIP. Keep insurance and investment separate; mixing them tends to give you mediocre cover and mediocre returns, and it makes the true cost of either piece impossible to see.