Expert advice

Nov 29, 2013,19.01 IST

How to calculate your life insurance needs?

There are several ways of calculating that. One of the ways is rule of thumb which says you can take about 10 times of the gross income as life insurance, that is a mere rule of thumb, but actual way of calculating is to find out if the person who is earning today were to pass away what kind of dependencies are there? How much of the expenses in future does he have to support? What is that amount that is required today so that the family can live comfortably into the future? What kind of goals are there, for example, children's education and marriage? What kind of cost he is going to incur today so that that can be comfortably achieved? What are the liabilities that one may have? So we need to consider all these things and whatever is that figure that is amount of insurance that one needs to take today and over a period of time we need to keep evaluating whether any new liabilities have been taken, new situations have been added and we need to keep adding to the insurance amount that one has over a period of time.

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