How to check if your term insurance cover is enough for your family in 2025

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Many salaried Indians buy term insurance early in their careers, often ticking it off as a one-time task. A cover of Rs 50 lakh or Rs 1 crore feels substantial at 30, especially when incomes are lower and responsibilities are still forming. The problem is that life rarely stays still. By 2025, changes in salary, housing loans, children’s education plans and ageing parents mean that many families are underinsured without realising it.

Term insurance is not a static product. It is meant to replace income, not just cover a number that once felt large. If your income has doubled since you bought your policy, or if you have taken on a large home loan, the original cover may no longer protect your family’s standard of living.

Inflation is another silent factor. A cover that seemed generous ten years ago buys much less today. Education and healthcare costs have risen faster than general inflation, which means the real value of your term cover erodes over time if it is not reviewed.

Most experts broadly agree on one principle: term insurance should primarily replace income for your dependants. A common thumb rule used by planners is 15-20 times annual income, adjusted for outstanding liabilities and existing assets. This is not a formula to follow blindly, but it is a useful starting point.

For example, if you earn Rs 15 lakh a year and have a long home loan and young children, a Rs 1 crore cover may fall short once you factor in loan repayment, education costs and daily household expenses. Borrowers often insure the loan amount but forget to insure the income that services the family beyond the loan.

One frequent gap is ignoring future goals. Many policies are sized only to clear current loans, leaving little for children’s education or a spouse’s long-term needs. Another issue is assuming employer-provided life cover is enough. Group term insurance from employers is useful but usually small, temporary and lost when you change jobs.

Policy structure also matters. Older policies may not include useful features such as better payout options or riders that suit current family needs. At the same time, buying unnecessary riders can inflate premiums without adding real protection.

If your current term insurance falls short, you do not need to cancel it. A common approach is “top-up by addition.” You keep the old policy and buy an additional term plan to bridge the gap. This avoids restarting coverage entirely and spreads risk across insurers.

It is also important to check nominee details and ensure your family knows where policies are stored. A large cover is meaningless if claims get delayed due to paperwork confusion.

You do not need to review your policy every year. But it is wise to reassess it at major life events: marriage, birth of a child, taking a home loan, or a significant jump in income. These are moments when your family’s dependency on your income changes materially.

Term insurance is not about finding the perfect number. It is about reducing financial shock for your family at a difficult time. An “adequate” cover that reflects today’s realities is far more valuable than a neatly chosen number from the past.

In 2025, with higher living costs and larger financial commitments, checking whether your term insurance is truly enough is not alarmist. It is responsible planning.

There is no universal number, but the right cover usually needs to clear major liabilities and replace income for dependants for a meaningful period. If your cover only repays loans and leaves little for household running costs and children’s goals, it is likely inadequate.

Yes, but be conservative. Count liquid assets that your family can actually access quickly and comfortably. Avoid assuming long-term or illiquid assets will be sold at a fair price in a stressful situation.

For most families, it is not enough on its own. Employer cover is job-linked and may be lost when you change roles. A separate personal term plan is usually the core protection, with employer cover treated as a helpful add-on.