It has been a little more than 2 years since the last post here and in the meantime, life has changed.
I have become a father, got some more responsibilities, changed a job and got some time to think.
One of the most important realizations that set in is that now, even more than earlier, the need to have adequate cover, in terms of insurance, so that should need be, the family should not be in trouble financially, for at least enough time for the kid to be stable, is necessary.
I have been late to this realization and for that, I shall be paying elevated premiums.
On the topic of elevated premiums, I notice that the premiums vary vastly across the sums and across the years of coverage. As you see in the below table, it makes sense to have a good estimate of how much to insure and for how long. One must not under insure just to save premium, while over insurance will take up some of your liquidity, which could have been better employed elsewhere.
| Cover Amount (Sum Assured) | Till Age 50 (18-Yr Term) | Till Age 60 (28-Yr Term) | Till Age 70 (38-Yr Term) | Till Age 80 (48-Yr Term) | Till Age 90* (Whole Life / 99) |
|---|---|---|---|---|---|
| ₹50 Lakhs | ₹3,631 | ₹5,501 | ₹8,032 | ₹11,443 | ₹16,229 |
| ₹75 Lakhs | ₹5,292 | ₹8,019 | ₹11,707 | ₹16,679 | ₹23,655 |
| ₹1.00 Crore | ₹6,851 | ₹10,380 | ₹15,155 | ₹21,590 | ₹30,621 |
| ₹1.50 Crore | ₹10,071 | ₹15,259 | ₹22,278 | ₹31,738 | ₹45,013 |
| ₹2.00 Crore | ₹13,154 | ₹19,930 | ₹29,097 | ₹41,454 | ₹58,792 |
| ₹2.50 Crore | ₹16,271 | ₹24,653 | ₹35,993 | ₹51,277 | ₹72,725 |
| ₹3.00 Crore | ₹19,319 | ₹29,272 | ₹42,737 | ₹60,885 | ₹86,351 |
| ₹3.50 Crore | ₹22,443 | ₹34,005 | ₹49,647 | ₹70,730 | ₹1,00,314 |
| ₹4.00 Crore | ₹25,595 | ₹38,780 | ₹56,618 | ₹80,662 | ₹1,14,400 |
Disclaimer: The figures above are indicative actuarial estimates modeled on ICICI Prudential iProtect Smart public rate benchmarks for a healthy 32-year-old non-smoking male. Final premiums depend on medical underwriting, gender, income band, and active insurer discounts at the time of purchase.
So, how do you know how much to insure and for how much time? The thumb rule says, 15-20X your current annual income plus your liabilities. The outcome is often a big number, which comes with big premiums to pay. For some, its not a problem and they can carry on and the matter stops there.
But, if you are interested to put in a few key details and planned future events into a calculator which can potentially show the amount that would be adequate, so that you neither under-or-over insure, this tool below is for you. Click on the “Fine-Tune My Real Number” tab and answer honestly.
It is named CoverCurve.
A fully private calculator that provides you an estimate based entirely on details that you provide. No data is shared, no information captured. Use it as many times as needed, in whatever scenarios you choose and then, download the text file for a reference.
I have built this as a means to assess your needs and cover, but then again, since I am not an expert here, it is possible I may have missed out on something.
So, please use this to estimate your cover and then discuss with your agents and stakeholders before buying the plan that suits your needs. I find the websites of Policybazaar and Ditto to be good places to compare and decide.
I hope this helps 🙂
Cheers!
