Calculating your recommended life cover is straightforward once you know the Life Insurance formula and what each input means. This guide explains the method in plain language, walks through a manual calculation, and gives worked examples you can follow — then you can do it instantly with the Life Insurance Calculator.
What is Life Insurance?
The Life Insurance calculation tells you your recommended life cover from a few simple inputs. The figure you are solving for here is the recommended life cover, expressed in INR.
The Life Insurance formula
The core formula is:
Recommended life cover = Annual income × Years to replace income + Outstanding debts - Existing savings & coverHere is what each input means:
- Annual income — a money amount. Example: ₹10,00,000.
- Years to replace income — a number. Example: 15.
- Outstanding debts — a money amount. Example: ₹20,00,000.
- Existing savings & cover — a money amount. Example: ₹10,00,000.
How to calculate it step by step
- Write down the annual income (for example, ₹10,00,000).
- Write down the years to replace income (for example, 15).
- Write down the outstanding debts (for example, ₹20,00,000).
- Write down the existing savings & cover (for example, ₹10,00,000).
- Apply the formula above to get your recommended life cover.
- Double-check the result with the Life Insurance Calculator.
Worked examples
Example 1
| Input / Output | Value |
|---|---|
| Annual income | ₹10,00,000 |
| Years to replace income | 15 |
| Outstanding debts | ₹20,00,000 |
| Existing savings & cover | ₹10,00,000 |
| Recommended life cover | ₹1,60,00,000 |
With annual income of ₹10,00,000, years to replace income of 15, outstanding debts of ₹20,00,000 and existing savings & cover of ₹10,00,000, the recommended life cover works out to ₹1,60,00,000.
Example 2
With annual income of ₹20,00,000, years to replace income of 15, outstanding debts of ₹20,00,000 and existing savings & cover of ₹10,00,000, the recommended life cover works out to ₹3,10,00,000.
| Result | Value |
|---|---|
| Recommended life cover | ₹3,10,00,000 |
Example 3
With annual income of ₹5,00,000, years to replace income of 15, outstanding debts of ₹20,00,000 and existing savings & cover of ₹10,00,000, the recommended life cover works out to ₹85,00,000.
| Result | Value |
|---|---|
| Recommended life cover | ₹85,00,000 |
Tips for an accurate result
- Keep your units consistent — mixing, say, months with years or grams with kilograms is the most common source of error.
- Round only at the very end. Rounding inputs early can shift the final answer noticeably.
- Re-run the numbers whenever an input changes, rather than estimating from an old result.
- Annual rates must be converted to the period you are calculating for (for example, divide an annual rate by 12 for a monthly figure).
Prefer not to do the maths by hand? — the Life Insurance Calculator does it instantly, for free, with the formula and a worked example built in.
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