How much life insurance cover do you need?
By Venkatesh TK, Founder, AdviceSahi. 20+ years in banking, wealth management and insurance distribution. Updated 16 October 2026.
A common starting point is to cover your future income needs, your loans and your family goals, then subtract what you already have. Many people begin with a multiple of annual income, but your own number depends on dependants, debts and savings. Treat any rule of thumb as a starting estimate.
What is the basic method?
Add what your family would need: income replacement for the years they depend on you, outstanding loans, and future goals such as education. Subtract savings, investments and existing life insurance. The gap is the extra cover to consider.
Is there a rule of thumb?
You will often see a multiple of annual income suggested. It is a quick check, not a rule. A person with a large home loan and young children usually needs more than someone with no dependants.
What should I include?
- Monthly household expenses your family would still have.
- Home loan and other debts.
- Costs of children education and marriage goals.
- Existing life insurance, including employer cover that may end if you change jobs.
- Savings and investments that could support your family.
Does the type of policy matter?
Yes. Term insurance is pure protection and is usually the most direct way to add cover. Savings plans combine cover and a maturity benefit, and the cover is often smaller for the premium. Compare cover per rupee of premium, and read how each policy works.
How can I see where I stand today?
Add your policies to AdviceSahi to see your total cover and a free insurance score showing how adequately you are covered. It is informational, and a licensed advisor can help you decide what to do next.
Common questions
Is employer life cover enough?
Often not. Employer cover can end when you change jobs, so do not rely on it as your only protection.
Should I buy term or a savings plan for cover?
Term insurance is pure protection and usually gives more cover per rupee of premium. A savings plan mixes cover and a maturity benefit. Compare both against your goals.
How often should I update my cover?
Revisit it when your income, loans or family change, and at least once every few years.
See what your policies are worth.
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What is a life insurance policy check?Life insurance terms explainedHow to choose a life insurance advisorThis article is for general information only. It is not financial, tax or insurance advice. AdviceSahi is a technology platform and is not an IRDAI registered entity.