Walk into any insurance conversation and the first question is always: how much cover? And most people either guess or take the advisor's word for it. Neither approach serves you well.
The most widely used formula is the Human Life Value method — essentially, your annual income multiplied by the number of earning years remaining. A 32-year-old earning ₹12 lakh a year, planning to work until 60, would need roughly ₹3.4 crore in cover just to replace their income stream.
But income replacement is only one part of the equation. You also need to factor in outstanding liabilities — home loan balance, car loan, any personal debt. Add your children's estimated education costs. Add the amount your spouse or parents would need as a financial cushion for 3–5 years without your income while rebuilding stability.
When you add it all up honestly, most people find they need somewhere between 10x and 15x their annual income. For many middle-class Indians, that puts the number comfortably above ₹1 crore — and often above ₹2 crore.
The reassuring part? Even a ₹2 crore term plan is affordable. For a 30-year-old in good health, premiums for that cover can sit around ₹18,000–₹22,000 a year. That's about ₹1,700 a month for genuine financial security.