Life Insurance (Term Cover) Calculator
How much term cover your family needs, two ways, and the gap against what you have.
Cover needed by each method
What the needs add up to
How this was calculated
Results are estimates for general information and planning, not financial advice. Banks and institutions may calculate differently (rounding, fees, rate changes). Confirm figures with your lender or a qualified adviser before deciding.
About the Life Insurance (Term Cover) Calculator
Term life insurance replaces your income if you die while your family still depends on it. This calculator estimates how much cover that takes, two ways, and shows the range between them and the gap against the cover you already have.
Human life value puts a price on what your income gives your family: your income after tax, less what you spend on yourself, rising every year until you retire, all brought back to today’s money. Needs-based cover adds up what the family would actually have to pay for: their living costs for the years they need support, rising with inflation, the loans you would leave behind, future goals such as education and a wedding, and an emergency fund — less the savings they could use. Both use standard present-value formulas, shown with your numbers, and everything is worked out in your browser.
How to use it
- Enter your age, the age you plan to retire, your income after tax and what you spend on yourself each year, with your expected pay rise and the return the payout could earn.
- Enter your family’s yearly living costs without you, for how many years they would need them and how fast they rise, your outstanding loans, an emergency fund, and future goals in today’s prices.
- Enter the savings and investments your family could use, and the life cover you already have — term plans, employer group cover and other policies.
- Read the cover range and the gap. The chart and table show each method, and “How this was calculated” shows the formulas; copy the summary or download the breakdown.
Examples
Own spending ₹3 lakh · income rising 6% · payout earning 8% · family costs ₹6 lakh a year for 25 years (6% inflation) · loans ₹40 lakh · education ₹20 lakh in 12 years and a wedding ₹15 lakh in 20 years (8% a year) · emergency fund ₹5 lakh · savings ₹25 lakh
Human life value ₹2.24 crore (about 15 times income) · needs-based ₹1.76 crore · with ₹75 lakh of cover today, the gap is ₹1.01 crore to ₹1.49 crore
Needs-based cover falls to ₹1.01 crore; the human life value stays ₹2.24 crore, because it measures the income, not the needs
Human life value
The idea goes back to S. S. Huebner, who argued in The Economics of Life Insurance (1927) that a person’s earning power is an asset the family can insure like a house. The calculator values the contribution C — your income after tax less your own spending — rising by g a year for the n years until retirement, received at the end of each year and discounted at r, the return the payout could earn:
HLV = C × [1 − ((1 + g) ÷ (1 + r))^n] ÷ (r − g) (or n × C ÷ (1 + r) when g equals r).
It answers “what is my income worth to my family?” — so it rises with income and falls as you near retirement.
Needs-based cover
The family’s yearly living costs E, in today’s money, are paid at the start of each of N years and rise with inflation; their present value is E × [1 − k^N] ÷ (1 − k) with k = (1 + inflation) ÷ (1 + r). Each goal’s cost is inflated to its date and discounted back: cost × (1 + goal inflation)^t ÷ (1 + r)^t. Loans and the emergency fund are added at face value, and your savings and investments are taken off. These are the standard present-value formulas of the time value of money (CFA Institute curriculum).
Needs-based cover depends on your family’s situation rather than your income, so the two methods can differ a lot. Taking the higher one is the cautious choice; the gap is that figure less the cover you already hold.
Choosing the numbers
Use a cautious return for the payout: your family will want it safe, in deposits or debt funds, and the return after tax is what matters — a lower return means more cover. Count living costs without you: drop your own travel and personal spending, keep rent, school fees and health insurance. Set the years of support to when your spouse retires or the youngest child becomes independent. Count only savings the family could actually use — not the house they live in. Review the cover when your income, loans or family change.
Limitations
- An estimate from your assumptions: steady returns, inflation and pay rises. It is not advice to buy any policy or any amount of cover.
- Taxes on the payout’s returns, and other income the family may have — a spouse’s salary or a pension — are not modelled; reduce the living costs by such income.
- Insurers decide the cover they will offer from your age, health, income and other factors. The figure here is what your family may need, not what an insurer will give.
- Disability and critical illness cover, which protect your income while you are alive, are separate and not worked out here.
Privacy
Everything happens in your browser. What you enter or open here is not uploaded or stored by MySmartCoPilot.
Frequently asked questions
How much term insurance do I need?
Enough that your family could pay their living costs, your loans and their future goals without your income. This calculator works that out from your own numbers, and also the value of your income until retirement; the range between the two is a sensible band. For the example above — age 35, ₹15 lakh a year after tax — it comes to ₹1.76 crore to ₹2.24 crore.
What is the human life value (HLV) method?
It values your future income that would go to your family — income after tax less your own spending — from now until retirement, brought back to today’s money at the return the payout could earn. It is the economic value of your earning power, an idea from S. S. Huebner’s work in the 1920s.
Which method should I use?
Both, and look at the range. Human life value suits someone whose family depends on their full income; the needs method suits someone who knows the family’s costs and goals. If they differ a lot, check your inputs, then lean towards the higher figure if you can afford the premium.
Should I count my employer’s group life cover?
Yes, as cover you have — but it usually ends when you leave the job, so do not rely on it alone for a long-term need. Enter it with your term plans under “Life cover you already have”.
Do loans count in full?
Yes, at the amount outstanding today, because the family would have to repay them. If a loan already has its own insurance that pays it off on death, leave it out.