Term Insurance Cover Calculator
How much life cover your household would need, by income replacement and by needs
Cover Needed (Needs Method)
₹1.3Cr
- Gap after Existing Cover
- ₹1.3Cr
- Income-Replacement Method
- ₹2.4Cr
- Its Gap
- ₹2.4Cr
Two methods, two answers: they ask different questions. Neither names a product.
Needs method
- Household expenses for 25 years, today’s value
- ₹1,34,32,332
- Loans to clear
- + ₹0
- Goals to fund
- + ₹0
- Savings available
- − ₹0
- Cover needed
- ₹1,34,32,332
- Existing cover
- − ₹0
- Gap
- ₹1,34,32,332
Income-replacement method
- Income for 25 years, today’s value
- ₹2,41,43,494
- Existing cover
- − ₹0
- Gap
- ₹2,41,43,494
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How this is calculated
Formula
PV = A × [1 − ((1 + g) / (1 + d))ⁿ] / [1 − (1 + g) / (1 + d)]
- A
- = the first year’s amount (income, or expenses)
- g
- = yearly growth (income growth, or inflation)
- d
- = return the payout earns
- n
- = years
With your numbers
- 1Expenses, today’s valuePV of expenses over the years of support₹6,00,000 a year, rising 6.0%, for 25 years at 7.0% = ₹1,34,32,332
- 2Needs methodexpenses + loans + goals − savings₹1,34,32,332 + ₹0 + ₹0 − ₹0 = ₹1,34,32,332
- 3Income methodPV of income over the years left₹12,00,000 a year, rising 5.0%, for 25 years = ₹2,41,43,494
- Each year’s amount is paid at the start of the year: the family needs the first year’s money straight away.
- The income method ignores what the family actually spends; the needs method ignores what you would have earned. Many people look at both.
Frequently Asked Questions
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