Amount of life insurance required varies across different life stages

The insurance needs of an individual increase as he grows older and his assets and liabilities change. ET Wealth looks at how much insurance is needed at different ages and what it costs.

Age: 25 Years
Status: Single

• Most likely no dependents if parents are financially well off
• No assets, no liabilities

Insurance required if

• one has an education loan
• is supporting parents/sibling financially

Buy a term plan to cover loan or 2-3 times annual salary.
Buy plan for 40 years so you don’t have to buy a fresh cover later.

Insurance cover: Rs 25 lakh
Cost of cover: Rs 2,862 per year

Total cover: Rs 25 lakh
Total premium outgo per year: Rs 2,862

Age: 30-35 Years
Status: Married with kids

• Supporting wife and toddler kids
• Few liabilities
• Car loan of Rs 5 lakh

Insurance need goes up after marriage, children

Insurance needed for

• protecting income
• covering car loan, etc.
• future needs of children

Buy term plan to cover loans and 5-8 times annual salary. If you have existing cover, top up with an additional cover.

Insurance added: Rs 1 crore
Cost of additional cover: Rs 8,614 per year

Total cover: Rs 1.25 crore
Total premium outgo per year: Rs 11,476

Age: 35-45 Years
Status: Married with growing kids

• Supporting kids, wife
• Liabilities increase as family grows
• Education and car loans end but new home loan of Rs 50 lakh

Insurance need shoots up

Insurance needed for

• protecting income
• covering big-ticket home loan
• future goals

Buy additional term plan to cover the home loan.
Take regular term cover, not one linked to the loan.

Insurance added: Rs 50 lakh
Cost of additional cover: Rs 7,493 per year

Total cover: Rs 1.75 crore
Total premium outgo per year: Rs 18,969

Age: 45-55 Years
Status: Middle age with college-going kids

Home loan nears end but new education loan for kids

Insurance need continues to be high

Insurance needed for

• protecting income
• covering big-ticket loans
• future goals

Though outstanding loans may have reduced, continue the existing term plans to account for inflation.

Insurance added: Nil
Cost of additional cover: Nil

Total cover: Rs 1.75 crore
Total premium outgo per year: Rs 18,969

Age: 55-65 Years
Status: Approaching retirement

• Children have started working
• Home loan has ended but education loan yet to be paid off

Insurance need comes down steadily

Insurance needed for

• covering outstanding loans
• future goals

Term plan for home loan can be ended at this stage.

Insurance stopped: Rs 50 lakh
Cost reduces by Rs 7,493 per year

Total cover: Rs 1.25 crore
Total premium outgo per year: Rs 11,476

Age: Over 65 Years
Status: Retired

• Children settled and married
• All loans have been paid off

Insurance not required anymore unless you want to leave a legacy behind
All the term plans can be discontinued at this stage

Insurance cover: Nil
Cost of cover: Nil

Total cover: Nil
Total premium outgo per year: Nil

*Premiums are of the basic Online Term Plan of Max Life Insurance.