Answer Book question
Enough that, if you died this year, your family could pay off what you owe, keep living the way they live now until the youngest is independent, and fund the things you have already promised. school, a wedding, a parent's care. For most earning Malayalis with dependants, that number lands between ten and twenty times annual income, and almost nobody has it.
Enough that, if you died this year, your family could pay off what you owe, keep living the way they live now until the youngest is independent, and fund the things you have already promised. school, a wedding, a parent's care. For most earning Malayalis with dependants, that number lands between ten and twenty times annual income, and almost nobody has it.
Suresh, 38, earns ₹9 lakh a year in Thiruvalla. Home loan ₹28 lakh. Two children, 8 and 11. His wife does not earn outside the home. His only cover is a ₹5 lakh endowment policy his father bought him. If Suresh dies next year, ₹5 lakh does not even cover one year of the home loan EMIs plus school fees. The family loses the house or the schooling within two years.
Life insurance replaces income that stops. It is not meant to make anyone rich; it is meant to stop a death from also becoming a financial collapse. The right number is built from four pieces: outstanding debt, years of household expenses until dependants are independent, one-time future costs, and a buffer for the fact that a grieving family is not a good investor. Subtract what you already have. savings, existing cover, a spouse's income. and what remains is the gap.
Total outstanding loans: home, vehicle, gold, personal, business guarantees Monthly household spend × 12 × years until the youngest child finishes education Large future costs: higher education, marriage expenses, parents' medical reserve Existing cover: employer group term, LIC or other policies, PMJJBY Savings and investments the family could actually access quickly Whether your spouse could earn, and how soon
People count the endowment or money-back policy "sum assured" as if it were real cover. A ₹5 lakh endowment paying ₹30,000 a year in premium is ₹5 lakh of cover. A pure term policy for a healthy 38-year-old might give ₹1 crore of cover for roughly the same premium. The product type, not your budget, is usually what is keeping the cover small.
Many Kerala households run on one salary plus a Gulf remittance. If the Gulf earner dies, the remittance stops and there is often no Indian life cover at all because the policy conversations happened abroad, or never. A returning NRI with a new Kerala business and a fresh bank loan is the classic under-insured person.
Suresh: loans ₹28 lakh + household ₹4 lakh/yr × 12 years = ₹48 lakh + education/marriage ₹20 lakh = ₹96 lakh. Minus existing ₹5 lakh policy and ₹6 lakh savings = roughly ₹85 lakh gap. A ₹1 crore term policy to age 65 closes it. At his age and health that premium is typically a fraction of his current endowment premium.
If you have no dependants, no debt, and assets that comfortably outlast you, you may not need life insurance at all. A policy sold to an unmarried 24-year-old with no loans is usually a savings product wearing an insurance label. The question is always "who loses money if I die," and if the answer is nobody, the cover can wait.
Write down the four numbers above on one page. it takes ten minutes List every policy you hold with its sum assured, not its premium Get a term insurance quote for the gap amount from two insurers before touching existing policies Do not surrender anything until the new policy is issued and in force
I already have life insurance from work. Is that enough? Term insurance or savings insurance. which problem does each solve? What happens to my home loan if I die? Should my wife have life insurance if she does not work outside the home?
Family support · Health, disability & life events · NRIs & returning Malayalis
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