There is no replacement for money that you need for survival. But can you say how much do you need to last at least one lifetime?
No, it is not possible to calculate an exact figure. Similarly, there is no fixed amount that you can arrive at to feel that your insurance coverage is just right enough. However, you can make an approximate estimate based on certain factors and then try to find the best insurance policy that helps you achieve your financial goals.
Let us concentrate on a few imperatives that will help you decide your financial goals based on practical reasoning and can lead you to decide what should be the insurance cover you need to buy:
1) Based On Your Income
In the case of an untimely death of the earning member, the first thing that gets affected is the income coming into the family. If the insured is the only bread-winner of the house, then the financial situation becomes even more complicated for his/her dependents. Therefore, the objective should be to replace your income with enough funds that can last till the time someone in the family starts earning. Ideally, the figure considered is 8-10 times of the annual salary of the insured as a decent compensation. To find out the best policy that provides you such a cover is to compare insurance plans in great detail so as to maximize your benefits.
2) Take Care Of Loans
This is the era of loans, and almost everyone has debts on their head. Home loans, car loans, personal loans are the order of the day, and these are acquired for a long duration of time to keep EMIs to a minimum. In the case of untimely death, all this debt will become the responsibility of the dependents that can turn into an acute crisis. Therefore, the insurance policies should be searched out to select the plan that offers you maximum coverage without any upper limits. This will help you to go for an amount that covers your entire debts as well as assist in giving something extra to the family till they start earning on their own.
We all have responsibilities that might include children’s education, their marriage, taking care of parents, etc. We do plan it when we are alive, but to ensure that those plans are executed smoothly even in the future without us, that is the real need. While making a long term goal like a child’s education, you should factor in the inflation figure as well. So whatever your overall debts and income replacement targets are, add to them the expense to carry out your responsibilities. Compare insurance plans appropriately and find out the one that offers maximum coverage at the lowest premiums to take care of all such needs.
Each will have different needs and priorities based on the socio-economic background he comes from. Therefore, there is no fixed amount which can be derived, but based on the above factors; you can arrive at an estimated figure to keep your family financially healthy for as long as possible. Various insurance policies in the market cater to different needs and can also be customized as per individual requirements. All you have to do is find out information about them, and it is easier to do it online from the comforts of your home, anytime, anywhere.
Your family needs the maximum financial coverage in your absence; ensure you select the best insurance policy to fulfil that requirement.