Saturday, 8 October 2011

Life Insurance – How much should I Insure

Life insurance is supposed to maintain almost same financial status to the dependents of a deceased person when he or she is alive. But how much money should need to maintain the same financial status. Can you imagine? If you are an earning person, your earnings will be increased over time due to various factors.  But after your death, could your family can survive as you are alive. 

Nobody can predict the financial needs of a family after their death. The circumstances may be changed and the needs also. But financial experts tell that one should need a life insurance worth around 10 times of his or her annual income. If you are getting an annual income of Rs. 5 Lakh, you have to take life insurance policy which could earn Rs. 50 Lakh after your death.

But this may differ from person to person and family to family. Some of your income may continue to be received even after your death. Rent, interest, profit from your business etc. Then you can reduce such income while calculating the desired sum assured. So you have to find out your sources of income which could be continued as a sources of income even after your death.

Calculate your families annual expenses. You can easily determine it by making a family budget. You should consider all expected expenditures such as expenses of food, education of your children including higher education, entertainment expenditures, medical expenses, marriage of your children, loan repayment, paying off liabilities etc. Consider whether your spouse is a stay at home person or working. Reduce all income which can earn even after your death. Then multiply the amount with 10 to calculate 10 years desired income. This should be your sum assured for your life insurance. At least this much amount could be received by your dependents from your life insurance after your death.

The amount may be high and the expected premium for life insurance for the desired sum assured is also may be a high amount. But we strongly advise you to g o for a pure term life insurance and if it is an online term life insurance the premium will be very less. Start such insurance as early as possible to reduce the premium amount and the maturity should be near about your retirement age.

Do not forget to make a Will and show all the details and mention to whom your assets including insurance claim should be given. Read more about making a will in time. So keep an adequate sum of life insurance and update it time to time.

Read more about online term life insurance.

Life insurance, secure your family financially


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