Not financial advice. All content is for educational purposes only.
Free Calculator · Term Insurance

How much term cover
do you actually need?

Most people are underinsured by crores and don't know it. Calculate your minimum cover in 3 steps using the Expense Replacement Method.

Step 1
Income & Expenses
Step 2
Human Life Value
Step 3
Assets & Liabilities
₹
per year
Your total household take-home income after all taxes - what actually hits your bank accounts each year.
₹
per year
Money actively set aside for future goals - not spent on living. We exclude this because we're only replacing what the family spends, not the full financial plan. The insurance corpus is invested to cover expenses; savings are a separate goal.
₹
per year
Expenses personal to you that the family won't need if you're gone - your gym, personal subscriptions, personal commute, grooming, work wardrobe, etc. These reduce the cover needed.
⚠️ Please fill in your Annual Income and Annual Savings before moving to Step 2 - we need both to calculate your family's living expenses.
Carrying forward from Step 1
Annual living expenses: -
years
Years until you plan to retire. This is how long the insurance needs to replace your family's expenses.
⚠️ Please enter your working years remaining - we need this to calculate how much corpus your family will need.
Human Life Value from Step 3
HLV: -
₹
Current outstanding principal on your home loan(s). Enter 0 if none.
₹
Future lump-sum goals in today's value - children's higher education, wedding corpus, etc. Enter 0 if none.
₹
Liquid assets your family could use - savings, mutual funds, FDs, emergency fund. Don't include your primary home or retirement corpus.
₹
Sum assured from all existing life insurance policies (term + any traditional plans). Enter 0 if none.
Additional Cover Needed
-
using the Expense Replacement Method
Human Life Value (Step 3)
-
Present value of future living expenses
+ Home Loan Outstanding
-
+ Other Financial Goals
-
− Existing Assets & Emergency Fund
-
− Existing Term Cover
-
⚠️
-
-
💡

Why not full income replacement? In a dual-income household, the surviving spouse's income continues. You only need to insure the family's living expenses - not the full financial plan. A single-income household should use the Income Replacement Method for a more conservative (higher) number.

The Method

How the Expense Replacement approach works

Four logical steps that give you a number grounded in your actual family expenses - not a thumb rule.

1

Find your net family income

Subtract personal expenses and income taxes from your gross income. This is what actually keeps the household running after the government takes its cut.

2

Isolate only living expenses

From that net income, identify actual household spending - not savings or investments. This is the number your family needs to maintain their lifestyle. The surviving spouse can continue the savings; we don't need to insure those.

3

Calculate the Human Life Value (HLV)

Use a present-value formula to find the lump sum corpus that - when invested - generates your family's required annual expenses for the remaining working years, adjusted for inflation.

HLV = Annual Expenses × [1 − (1+g / 1+r)ⁿ] / (r − g)
g = 6% inflation  ·  r = 9% discount rate  ·  n = working years
4

Add liabilities. Subtract existing assets.

Add outstanding loans and unmet financial goals (education, goals). Subtract what you already have. The balance is your minimum insurance cover.

Minimum Cover = HLV + Liabilities + Goals − Existing Assets
Choosing Your Method

Expense Replacement vs Income Replacement

The calculator above uses the Expense Replacement Method - we recommend this for dual-income households where the surviving spouse continues to earn. It insures only what the family spends on living, not the full income, which gives a more precise and lower cover number.

The alternative is the Income Replacement Method, which is more conservative and more appropriate for single-income households - where one person's income funds everything, including savings and future goals. It replaces the entire net income, not just living expenses, so the cover number is significantly higher.

📌

For the example in our infographic - ₹40L annual living expenses, 25 years remaining - the Expense Replacement Method gives ₹7 Crore minimum cover, while the Income Replacement Method gives ₹14 Crore. Both are valid; the right one depends on your household structure.