What is the ideal term cover for you?

A plain vanilla term plan is a key component of every individual’s financial plan. However, insurance needs vary as per one’s age and liabilities. For instance, a middle-age working woman with high income, sizeable assets and very few liabilities may not need life insurance at all. On the other hand, for a young professional with an education loan, it is advised that a term cover equivalent to the loan amount should be bought. Mint tells you how much insurance you need at different life stages and what will it cost.

Age: 24-29 years: Young professionals usually do not need insurance. However, if you have an education loan or are supporting parents or sibling, get a term plan that covers your loan or sibling’s education expenses, whichever is applicable.

Age: 30-35 years: One is most likely to be married and have kids by this age. Insurance should be bought to support dependent kids, parents and spouse. You may even be servicing an education or car loan. A cover amount of at least 1 crore or 8-10 times your annual income should be bought. 1 crore term cover will cost 1,100 every month.

Age: 36-45 years: At this stage, liabilities increase manifold as you start planning for children’s college and take high-ticket loans. Early 40s to early 50s also mark peak earning years with high lifestyle costs. One has to buy insurance to protect income for dependents, support financial goals and cover loans. Buy a plan equal to 12-15 times your dependents’ annual expenses.

Age: 46-55 years: One may take an education loan to fund children’s education. If you already have a term plan, you can top it up with an additional cover of 50-60 lakh.

Age: 56-62 years: As you start nearing retirement, liabilities of outstanding loan and supporting children start coming down. Buy a new plan if you have outstanding loans. A retiree with no liabilities does not need insurance.

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