Question 1

How much term insurance cover do I actually need?

Accepted Answer

There is no single multiple that works for everyone. The right number is a **needs-based** one: replace the income your family loses, clear every loan, fund the goals you were going to fund anyway (education, marriage), add a medical and final-expenses buffer, then **subtract the assets your family actually inherits**. This calculator does exactly that and shows two rule-of-thumb cross-checks (Human Life Value and an age-banded income multiple) so you can see how far apart they are.

Question 2

Why does this calculator assume a 7% return and not 12%?

Accepted Answer

Because the money is a **death benefit, not a portfolio**. A family that has just lost its earning member cannot afford equity volatility on the corpus that pays the grocery bill. With the repo rate at 5.25% (June 2026), a debt-heavy portfolio realistically returns around 7%. At 6% inflation that is a **real return of only ~0.94%** - which is why the income-replacement corpus lands close to annual expenses multiplied by the number of years. That is the correct, honest answer, not a pessimistic one. If you assume 12%, you will under-insure.

Question 3

Should I count my employer's group life cover?

Accepted Answer

By default this calculator **excludes** it, and that is the safer choice. Group cover ends the day you resign, are laid off, or retire - typically the exact moment you also lose the ability to buy fresh cover cheaply. It is also usually a low multiple of salary. Treat it as a bonus, not as part of your plan. There is an opt-in checkbox if you want to include it anyway.

Question 4

Is the term insurance payout taxable for my family?

Accepted Answer

No. A death benefit received by the nominee is **exempt under Section 10(10D)** of the Income Tax Act, with no cap. This is one of the few genuinely tax-free payouts in Indian personal finance, and it is why the calculator does not apply any tax haircut to the sum assured.

Question 5

Do I get a tax deduction on the premium?

Accepted Answer

Only if you are on the **old tax regime** - term premium qualifies under Section 80C (₹1.5 lakh limit, shared with EPF, PPF, ELSS, home loan principal and so on). Under the **new regime**, which is now the default, there is no 80C deduction. Never buy term insurance for the deduction; buy it for the cover.

Question 6

How long should the policy term be?

Accepted Answer

Long enough to cover the period during which someone depends on your income: until you retire, or until your youngest child finishes education and starts earning, whichever is later. This calculator recommends a term on that basis and caps it so the policy does not run past age 70 - beyond that, premiums escalate sharply and the dependency is usually gone.

Question 7

Will the insurer actually issue the cover this calculator recommends?

Accepted Answer

Not necessarily. Indian insurers underwrite roughly **10x to 20x annual income**, sliding down with age, and the exact ceiling **varies by insurer**, occupation, health, and how well your income is documented. If the recommended cover exceeds the practical ceiling, split it across two insurers, buy in stages as income grows, or use a rider structure. The calculator flags this for you.

Question 8

Should the nominee take a lumpsum or a staggered payout?

Accepted Answer

The model here assumes a **lumpsum** that gets invested conservatively - that is what the present-value maths represents. A staggered (monthly income) payout removes the risk of the corpus being mismanaged or lent out, but it also locks the family into the insurer's fixed schedule with no flexibility for a big one-off need. A common middle path is a **partial lumpsum** (enough to clear all loans immediately) plus a monthly income stream for the rest. Riders such as accidental death benefit, critical illness or waiver of premium change the premium, not the cover you need - so they do not appear in this calculation.

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