Should I increase my term insurance cover of Rs 75 lakh and health insurance cover of Rs 10 lakh considering inflation?

These are a set of queries raised by ET Wealth readers, which have been answered by our panel of experts.

I am 38, a salaried professional earning Rs 22 lakh annually. My family includes a spouse and a 5-year-old child. I currently have a Rs 75 lakh term insurance policy and a Rs 10 lakh family floater health cover. Is my term cover adequate, or should it be increased considering inflation and long-term goals such as child’s education? I want to ensure my coverage is adequate but not excessive.

Mahavir Chopra, Co-founder, Beshak.org: The right way to determine an adequate term insurance cover is to assess the financial gap your family would face if you were no longer there to provide for them. In simple terms, the cover should bridge the gap between what your family would need and what they already have, both now and in the foreseeable future.


An adequate cover amount can be calculated as: Cover amount = (living expenses + future goals such as your child’s education + outstanding debts) − existing funds and investments earmarked for these goals. For a 38-year-old earning Rs 22 lakh with a young child, Rs 75 lakh could be on the lower side unless substantial assets are already set aside. A personalised calculation is therefore important and should factor in inflation and lifestyle needs. It is always advisable to review and update your cover periodically as your financial responsibilities evolve.

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I am 45, salaried, and currently cover my parents (aged 68 and 64) under a separate family floater health insurance policy of Rs 10 lakh. With rising medical costs and frequent sub-limits on senior citizen policies, should I continue with the floater plan or switch to individual policies for each parent?

Sarbvir Singh, Joint Group CEO, PB Fintech: The choice between a floater and individual policies is less important than ensuring adequate and flexible coverage. In most cases, a well-structured family floater remains an efficient option. Floaters are typically more cost-effective and allow you to opt for a higher common sum insured. If one parent requires hospitalisation in a year and needs a large cover, a floater with a high sum insured works better than having separate individual policies with lower limits.

Parents do have different healthcare needs, but modern floater policies can address these through features such as day-one cover for select pre-existing conditions, no upper age limits, no mandatory co-payments, and inclusive benefits. Individual policies may be relevant only in very specific medical scenarios. Otherwise, the focus should remain on choosing a high sum insured with minimal sub-limits and restrictions.

Our panel of experts will answer questions related to any aspect of personal finance. If you have a query, mail it to us right away. Email ID: etwealth@timesgroup.com