What life insurance coverage would be ideal for you?

What life insurance coverage would be ideal for you?

Photo: BCCL

New Delhi: Life insurance is an agreement between the insurer and the insured which covers the life of the latter. It offers financial assistance in the event of the death of the insured during the term of the contract, the beneficiary. This is why having life cover is a must for every earning person.

However, an important question that most of the time remains unanswered is: what would be the ideal coverage for me? In the simplest terms, the answer to this question lies with the individual himself. They are the ones looking to get life cover, so they need to carefully analyze their financial needs and desires.

As simple as it may seem, finding the perfect blanket for yourself is no easy task. So here are some factors that might help make the decision easier.

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Factors that affect the right amount of life insurance:

Anyone wishing to take out a life insurance policy must first verify their annual income. The rule of thumb used to decide coverage is 10 times annual income, however, don’t forget the rising rate of inflation, the rising standard of living. Thus, it would be better to have coverage of almost 20 times your annual income.


Another key factor that comes into play in deciding the sum insured for your life insurance plan is the liabilities. Since life insurance guarantees financial assistance to the family of the insured in the event of death, the coverage must be such that it helps the family members to pay off these debts and lead a peaceful life.

Financial goals

Any investment should be made with financial goals in mind – new purchase, home, marriage, education, etc. Since the interest of the life insurance policy is to guarantee the financial needs of the family after the death of the insured, the cover should at least cover the most important expenses such as the education of the children and the wedding.


Age is a crucial factor when deciding to purchase life insurance, as people of different ages have different responsibilities. Ideally, young people, say between the ages of 25 and 35, can opt for higher coverage, as they can currently pay higher premiums given that they don’t have a lot of responsibilities.

As people age, their responsibilities increase and therefore they cannot afford higher premiums and therefore would have lower coverage amounts.

Additionally, anyone looking to purchase life insurance should know what type and how much they need. Individuals can also use online calculators to help them choose the right policy and coverage for them.

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