FREEDOM / WISE
Worked Example

What is the term insurance gap for an earner with ₹15 lakh annual income supporting 3 dependents?

Scenario

Anjali, age 35, mid-career marketing manager in Mumbai, ₹18 lakh annual income, married with one child, ₹70K monthly household expenses

Inputs

Dependents
3
Annual income INR
15,00,000
Current cover INR
0
Multiplier recommended
5

Calculation

  1. 1.

    Recommended cover (5× annual income)

    ₹15L × 5 → ₹75.00 L

  2. 2.

    Current cover

    Sum of existing term policies → ₹0

  3. 3.

    Cover gap (extra cover needed)

    Recommended − Current → ₹75.00 L

  4. 4.

    Approximate premium for gap cover at age 35 (₹/year per ₹1cr)

    (Gap / 1cr) × ₹12,000 → ₹9,000

Conclusion

Cover gap of ₹0.75 crore; bridging it at age 35 costs roughly ₹9,000/year — usually under 1% of income for adequate family protection.

Tradeoffs

Higher cover = higher premium. Older purchase age increases premium 8-15% per year. Health-related declines exclusions if pre-existing conditions exist. Buy term insurance before age 35 if possible to lock in low premium for 30-year policy.

More in Insurance

What's the premium difference between family floater and individual policies for a young family?

InsuranceHand-crafted

Family floater saves ₹17,000/year for similar (but shared) coverage. Over 25 years of continuous coverage, this compounds to ~₹4.25 lakh of premium savings — meaningful but small relative to a single ₹15L+ medical event.

Open worked example

What does adequate health insurance cost for a 35-year-old family of 4 in a metro?

InsuranceHand-crafted

₹36,000/year delivers ₹15L base + ₹50L catastrophic + ₹25L critical illness coverage. For old-regime 30%-slab filers, effective post-tax cost is ~₹28,500/year. This is the architecture that protects a corpus against single-year medical events.

Open worked example

What does ₹1.5 lakh per year over 20 years deliver in a ULIP vs in Term + Direct Equity MF?

InsuranceHand-crafted

Unbundled approach delivers ₹1.11 crore vs ULIP's ₹65 lakh corpus — about 70% more — AND provides 10× the death cover (₹1.5 Cr vs ₹15L). Same out-of-pocket cost for the household.