Parents: What Amount Should You Have in a Life Insurance Policy?

Life Insurance Policy Needs for Parents

As a parent, you know you need a life insurance policy, but how much? What is the minimum amount your survivors would need for the monetary loss of you or your spouse? It is estimated to raise a child from birth to college can cost anywhere in the neighborhood of Rs. 7,00,00,000 Here are some quick and simple ways to get an idea of how much your life insurance policy should be:

Option 1: Determining Expenses (-) Assets: Figure a rough estimate of your annual family budget. This would include your mortgage, child care, insurance, and basic living expenses of living spouse. Don't forget to include expenses such as vacations, and future education plans such as private school and college. Next, estimate a figure for your assets such as savings, social security benefits, or any other income that will be there such as the income of a surviving spouse. Remember, stay-at-home spouses contribute a lot to the family income by by-passing child care, travel, cleaning, cooking, tutoring and associated costs, therefore would need to be insured also.

Option 2: Salary Estimate: Another quick, but more general way, would be to take your current annual salary and multiply that by 7. For example, if you make Rs. 12,00,000/per year then I would recommend buying a minimum of 84,00,000(12,00,000 X 7= Rs. 84,00,000).

If your estimate is high, good, it's probably right. If you are worried about the premium cost, I would recommend choosing term life insurance. You can get a policy for the time you would need it (the amount of time your kids would depend on you) for a lower premium than other insurance options.

If your estimate is high, good, it's probably right. If you are worried about the premium cost, I would recommend choosing term life insurance. You can get a policy for the time you would need it (the amount of time your kids would depend on you) for a lower premium than other insurance options.)