Are you adequately insured? Why most families don’t have enough cover until it’s too late

Subscribe to enjoy similar stories. A term insurance plan offers more than a sense of security, it creates a financial cushion that protects your family in case of your absence. With the recent goods and services tax (GST) rate overhaul making term insurance products 18% cheaper, many people focus on simply "having" a policy.

Far fewer stop to assess whether their life cover is actually adequate for their family’s needs. Consider the case of Ravi, 35, and Priya, 32, a young married couple in Bengaluru, both software engineers building a life together with their child. Like many families, they had taken on financial commitments to pursue their aspirations: a ₹35 lakh home loan and a ₹10 lakh car loan.

Life seemed on track until tragedy struck and Ravi unexpectedly passed away. Ravi had a term insurance cover of ₹30 lakh, far below the family’s total financial obligations. The burden of EMIs, childcare and education now fell entirely on Priya.

Had Ravi opted for a ₹1 crore cover, Priya could have cleared both outstanding loans and still been left with a sizeable corpus to support herself, raise their child and continue their financial savings plan. In effect, Ravi’s insurance would have acted as an income-replacement tool for the family. A popular rule of thumb suggests a life cover worth 10 times your annual income.

But real-life needs often stretch far beyond that. With inflation steadily raising the cost of living, a policy purchased seven years ago may no longer be sufficient today. Your ideal life cover should take into account your family’s monthly expenses and the number of years they will need support.