Future Generali India Life Insurance Company Limited is now Generali Central Life Insurance Company Limited. Generali Central Life Insurance Company Limited – A joint venture between Generali – one of the world’s leading insurers and Central Bank of India, India’s finest nationalised bank.
Future Generali India Life Insurance Company Limited is now Generali Central Life Insurance Company Limited. Generali Central Life Insurance Company Limited – A joint venture between Generali – one of the world’s leading insurers and Central Bank of India, India’s finest nationalised bank.
Term Life Insurance Coverage and Ideal Coverage Amount
2 mins
5.4KTerm insurance is a kind of life insurance that bears coverage for a specific period or "duration" of years. If the insured person dies within the period defined in the policy and the policy is in effect, a death benefit will be paid.
The most common difference between term insurance and life insurance schemes is that a term insurance scheme provides for death benefits only if the insured person dies within the time frame.
How much do I need?
To determine how much insurance you need, a person needs to calculate the life insurance coverage ratio. The life insurance coverage ratio is the amount of insurance coverage in relation to the policyholder's income. One of the problems India faces is the very low life insurance coverage ratio. The coverage ratio indicates the extent to which insurance is adequate. It helps to determine whether death benefits and investments are sufficient to cover the daily expenses and health of the family.
Life Insurance Coverage Ratio = (Net Worth + Death Benefits)/Annual salary or Annual income Your net worth is your total assets - total liabilities.
Let's say Ashish has total assets worth ₹50 lakh, of which he has a ₹15 lakh home loan and ₹13 lakh personal loan as debt. So, a person’s net worth is ₹22 lakh (Asset of ₹50 lakh- liabilities of ₹28 lakh)
If Ashish has a term insurance cover with a death benefit of another ₹25 lakh and the annual salary is ₹6 lakh. Then:
Life Insurance Coverage Ratio= 2800000 + 2500000/ 600000= 8.83
This life insurance coverage ratio shows that Ashish has made arrangements for only 8.83 years of his family's financial needs if he/she dies today. In most cases, a life insurance coverage ratio of 10 is descent enough however.
There are other methods to calculate this such as Underwriters Thumb Rule, Income Replacement Value and Premium as a Percentage of Income.
Underwriters Thumb Rule:Under this rule, the sum insured needed is depending upon the age and in multiples of annual salary/income. For example, individuals within the age of 20-30 years should have insurance coverage equal to 25 times the annual salary/income.
Income Replacement Value: This method is also based on a person’s annual salary/income. Required coverage is annual salary/income * years left on retirement. But it's better to decide with the help of a financial planner.
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Have questions? Get help and reliable support from experts at Generali Central India Life Insurance.
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From insurance basics to wealth-building strategies — everything you need, in one place.
Got Questions? We’ve Got Answers!
Here are answers to some of the questions you might have.
Life insurance is a financial safety net that supports your loved ones in your absence. If something happens to you, it provides them with funds to help cover everyday expenses, repay debts, and achieve future goals. It gives you peace of mind, knowing your family’s financial future is secure— no matter what.
The right plan depends on your needs.
Start by assessing your life stage, financial goals, and the needs of your family. Consider factors like your income, outstanding loans, future expenses and goals (like children’s education, foreign travel, study abroad), and desired coverage amount. We offer a wide range of plans that cover multiple goals and budgets. To get a better idea and make a confident choice consult with a financial advisor or call us on 1800 102 2355.
A good rule of thumb is to aim for coverage that's 10–15 times your annual income. Consider your family’s living expenses, outstanding loans, children’s education, and long-term goals. The right amount ensures your loved ones can maintain their lifestyle and meet future needs— even in your absence.
We would love to help you choose and buy the right policy for your needs. Call our toll-free number 1800 102 2355 or drop us an email at care@generalicentral.com.
Reach out to us in any way that you prefer, and our team of experts will soon get back to you!
Disclaimers
Understand your policy better with key details and insights into our Generali Central Life Insurance.
This Product is not available for online sale. Life Coverage is included in this Product. For detailed information on this plan including risk factors, exclusions, terms and conditions etc., please refer to the product brochure and consult your advisor, or, visit our website before concluding a sale. Tax benefits are as per the Income Tax Act 1961 and are subject to any amendment made thereto from time to time. If you have any request, grievance, complaint or feedback, you may reach out to us at care@generalicentral.com For further details please access the link: www.generalicentrallife.com/customer-service/grievance-redressal-procedure.
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