What is the term insurance cover calculator?
A practical tool that computes the right life-insurance sum assured using the income-replacement methodology plus liability coverage plus per-child buffer, minus your existing safety net. Ported from NYVO Insurance (nyvo.in).
The methodology
Unlike the crude "15–20× income" rule of thumb, this calculator models the actual financial needs of surviving dependents:
- Effective monthly expense: actual expenses × 0.8. Survivors consume roughly 20% less than the full household.
- Death-buffer inflation: inflate the yearly expense forward 3 years at 5% — accounts for the gap between death and dependents fully adjusting their lifestyle / finding stable footing.
- Present value of future expenses: compute PV over (supportAge − age − 3) years at 5% inflation / 10% investment return. The payout, invested conservatively, should cover this stream.
- Plus total loans: add all outstanding debt. The payout wipes these so dependents inherit a clean balance sheet.
- Plus kids buffer: ₹50 lakh per dependent child. Covers long-term needs — education, marriage, setup capital.
- Minus existing safety net: 100% of existing term cover + 25% of liquid investments. Investments are discounted 75% because they're often earmarked for retirement, not dependents' income replacement.
- Round up to nearest ₹2.5 L; floor of ₹50 L.
Example
32-year-old parent, ₹1.5 L/month household expenses, supporting dependents until age 60, ₹50 L home loan, 1 child, ₹1 Cr existing term cover, ₹40 L existing investments:
- Effective yearly expense: ₹1.5 L × 0.8 × 12 = ₹14.4 L
- At death (3y out, 5% inflation): ₹16.7 L/year
- Years of support: 60 − 32 − 3 = 25 years
- PV of expenses: ~₹2.3 Cr
- Plus loans: ₹50 L
- Plus kids buffer: ₹50 L
- Gross cover: ₹3.3 Cr
- Minus existing term (1 Cr) + 25% of investments (10 L): ~₹1.1 Cr deduction
- Recommended cover: ~₹2.25 Cr (rounded)
Why not just "15× income"?
The income-multiple rule is popular because it's simple. But it ignores:
- Actual dependency duration (supporting until age 60 vs 45 matters)
- Household liabilities (a ₹1 Cr home loan on top of income needs = different math)
- Existing savings (a person with ₹1 Cr in MFs needs less term cover)
- Kids' long-term needs (specific large expenses at specific future dates)
The calculator accounts for all four. The number you get is usually different from the simple multiple — sometimes higher, sometimes lower.
Premium estimate
The annual premium shown is a rough estimate:
| Age | ₹ per ₹1 lakh of cover |
|---|---|
| Under 30 | ~₹500 |
| 30–40 | ~₹700 |
| 40–50 | ~₹1,200 |
| 50+ | ~₹2,500 |
Actual premiums vary by:
- Insurer: HDFC, ICICI, Max Life, Tata AIA, LIC — differences of 20–40% common
- Smoking status: smokers pay 30–70% more
- Medical history: pre-existing conditions raise premium or add exclusions
- Medical test results: mandatory for covers above ₹50 L–₹1 Cr depending on age
Use the estimate as a budget check; get live quotes for actual pricing.
Common mistakes
- Buying too little cover. Most families with term cover are under-insured by 40–60% vs the methodology. Use this calculator to right-size.
- Buying whole-life / endowment / ULIP instead of term. Term is pure protection, cheap. Whole-life bundles protection with low-return investment. Keep them separate: buy term, invest the difference in mutual funds.
- Not disclosing smoking or medical history. Claims get rejected on non-disclosure. Tell the truth.
- Not revisiting cover at life events. Marriage, new baby, new home loan — each adds to what your family needs. Recompute every 3–5 years.
- Skipping medical tests to "save time." Medical-test plans are cheaper and reduce claim-dispute risk. The 1-day inconvenience is worth it.
Related guides on nyvo.in
NYVO Insurance (nyvo.in) has:
- Plan-by-plan comparison (HDFC Click2Protect, ICICI iProtect, Max Life, LIC, Tata AIA)
- Live premium quotes
- Rider analysis (accidental death, critical illness, waiver of premium)
- Joint-life term, NRI term, smoker term specialist guidance
The calculator tells you the right number. nyvo.in helps you pick the right product.
Frequently asked questions
What tenure should I pick? Cover should run until your dependents no longer need your income. For most families, that's up to your retirement age (60) or when your youngest child is self-sufficient (~25).
Should both spouses have term cover? Yes if both contribute economically. That includes the non-earning spouse — their unpaid labour (childcare, household management) has real replacement cost. Buy term on both.
Is ₹50 L cover enough? For a single person with no dependents, possibly. For a family with a mortgage and kids, almost never. Use the calculator.
When should I increase my cover? After marriage, after each child, after taking on a large loan. Any 20%+ income jump is also a good trigger.
