A common starting point is 10 to 15 times your annual income, then add your loans and subtract savings and cover you already have.
Start with the income rule
Term insurance replaces your income if you are not around. A quick rule is 10 to 15 times your yearly income. If you earn 10 lakh a year, that gives a range of 1 crore to 1.5 crore.
Younger people with long working years ahead and young children usually sit at the higher end. People close to retirement can go lower.
Then adjust for your real situation
Add loans that your family would have to repay, such as a home loan or car loan. Add big future costs, such as a child's education or marriage.
Subtract what you already have: savings, investments and any existing life cover. The result is the gap your term plan should fill.
A worked example
A 32 year old earns 12 lakh a year, has a 40 lakh home loan and one child. Ten times income is 1.2 crore. Add the 40 lakh loan, and 20 lakh for education. Subtract 15 lakh of existing investments and 25 lakh of group cover from the employer.
That leaves about 1.2 crore of cover needed. Note that group cover ends when you change jobs, so it should not be counted forever.
Choose the term, not just the amount
Pick a policy term that runs until your dependants are independent or you retire, often age 60 or beyond. Buying early keeps the premium low for the whole term.
Compare insurers on claim settlement record and the riders that matter to you, not only on the cheapest premium.
Common questions
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Written by Kalpvrukshfinserv, Pune. Last updated 28 October 2026. This guide is general information, not investment, insurance or tax advice. Mutual fund investments are subject to market risks. Rules and rates change, so confirm current terms.