When we think of life insurance, most of us have a simple number in mind: “10 times your annual income.” It’s a rule of thumb that many agents and online calculators throw around. But here’s the truth: life isn’t a formula. And neither is financial protection.
The real question isn’t how much your salary is, it’s how much your family would need if you weren’t there to provide it.
At Pratham Services, we’ve helped hundreds of families understand this difference. And today, we’re breaking it down for you in plain language.
Why Life Insurance Isn’t Just About Dying
Let’s be honest. No one likes to talk about death. But life insurance isn’t about death. It’s about continuity. It’s about making sure your family can maintain their lifestyle, dreams, and peace of mind—even in your absence.
Think of life insurance as a financial backup plan, the kind that pays rent, EMIs, school fees, and future goals, even if your income stops.
The Problem with the “10X Rule”
Let’s say you earn ₹8 lakhs a year. 10X means you’ll buy ₹80 lakhs of coverage.
But:
- You have a ₹50 lakh home loan
- Your child’s education may cost ₹25–30 lakhs in future
- Your spouse doesn’t have independent income
- You have elderly parents who depend on you
Suddenly, ₹80 lakhs don’t feel like much, does it?
That’s why the 10X rule is the starting point, not the final answer.
What Should You Consider Instead?
Let’s break it into real-life buckets:
1. Outstanding Loans
List out all your current liabilities, home loan, car loan, personal loan, credit card dues. Your insurance should at least cover these, so your family isn’t burdened.
Example: Home loan ₹50L + car loan ₹6L = ₹56L
2. Monthly Expenses × Years Left
Calculate your family’s annual living cost and multiply it by the number of years your dependents will need support.
Example: ₹40,000/month × 12 × 20 years = ₹96L
This is the income replacement portion of the cover.
3. Future Goals
Think about what you’d fund if you were around:
– Children’s higher education
– Marriage expenses
– Retirement for your spouse
Estimate those costs in today’s terms and add them in.
Example: Child’s education = ₹25L
4. Emergency/Medical Fund
Keep a cushion of ₹5–10 lakhs as a buffer for emergencies, especially if your family doesn’t have medical insurance or additional income.
So, What’s the Right Cover?
Let’s do a sample calculation:
| Category | Estimated Amount |
| Loans | ₹56 lakhs |
| Household expenses (20 yrs) | ₹96 lakhs |
| Child education | ₹25 lakhs |
| Emergency buffer | ₹10 lakhs |
| Total | ₹1.87 Crores |
Now that number gives your family real peace of mind, not a generic “10X” number.
But What About Premiums?
Many people hesitate at the idea of taking a ₹1.5–2 crore policy. But remember, term insurance is extremely affordable.
A 30-year-old non-smoker can get ₹1 crore cover for around ₹10,000–12,000 per year. That’s less than ₹1,000 per month. A small price for a big shield.
When Should You Review Your Insurance?
Your ideal cover isn’t fixed forever. You should review your life insurance every 3–5 years, especially when:
- You get married
- Have children
- Take a new loan
- Your income rises significantly
At each stage, your financial responsibilities grow, and your coverage should grow with them.
Common Myths Busted
“I already have insurance from my job.”
Group insurance is usually limited (₹10–25 lakhs) and ends when you leave the job. It’s a nice bonus, but not enough.
“I’m young and healthy. I don’t need it now.”
Exactly why it’s the best time to buy. Premiums are lowest when you’re younger and healthier.
“I’ll start when I earn more.”
Even a basic term plan is affordable. Delaying only increases your cost and risk.
How Pratham Services Can Help
At Pratham, we don’t sell one-size-fits-all plans. We sit with you, understand your lifestyle, goals, and liabilities and calculate the cover you need.
We help you:
- Choose between term, ULIP, or combo plans
- Avoid overlapping or duplicate coverage
- Align insurance with future milestones
- Simplify claims and documentation for your family
We’re not here to sell a product. We’re here to build your protection story.
Final Thought
Life insurance isn’t about predicting death. It’s about protecting life as it is today and tomorrow.
So, before you ask, “How much cover is enough?” ask instead:
“If I weren’t around, what would my family need to feel safe and supported?”
That’s your number. And we’re here to help you get it right.