Term Insurance Guide 2026: How Much Cover Do You Really Need?
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Term insurance is pure protection. It pays a lump sum if you die during the policy term. It has no investment component, which keeps premiums lower than endowment or ULIP products.
A practical cover formula
Many planners use a multiple of annual income (10–20×) or a needs-based calculation:
- Outstanding loans (home, education, personal)
- Future family living expenses for 10–15 years
- Children’s education and marriage goals
- Minus existing savings and investments that can be liquidated
For a primary earner with young children and a home loan, covers of ₹1–2 crore (or higher) are common in 2026.
What to prioritise
- Claim settlement ratio and volume of the insurer
- Clear definitions and few exclusions
- Option to increase cover later (life-stage or income-based)
- Premium payment flexibility (monthly/annual) and riders only if truly needed
Buy early when you are healthy — premiums are lower and underwriting is smoother.