Ask Mint | Life cover should be 7-10 times your pay

Ask Mint | Life cover should be 7-10 times your pay
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First Published: Tue, Feb 16 2010. 09 33 PM IST

Updated: Tue, Feb 16 2010. 09 33 PM IST
I am 35 years old and my kid turned 5 last month. I have an annual income of around Rs15 lakh. How much life cover should I have? Are there options to increase the cover later?
—C. Sridhar
You should have a life cover for mainly three reasons. One is to replace income in case of death and this should be 7-10 times your annual income. Two, it should also cover any liabilities, such as a home loan. Three, it should cover/discharge any family liabilities, such as your kid’s future needs. You can opt for a life cover that covers all the three above, or a combination of either, depending on the policies you may already have. Yes, there are options to increase the cover later. However, you should weigh that at this stage and increase it at the earliest for cost benefits.
Can the date of paying a premium for life insurance be changed? What all needs to be done for that?
—Jan Thomas
The due date of premium payment cannot be changed. However, flexibility of grace period of 30 days is available from the date of premium due date to enable the customer to pay the premium on any day during that period.
Is there an insurance product that gives a life cover and health insurance together? How much does the cost of such policies work out to?
—K.C. Verma
There are life insurance products that offer health insurance riders, such as critical illness rider and hospitalization benefit rider. These are cheaper options, but you should go for a comprehensive insurance policy if your primary need is health insurance.
When I bought two life policies 10 years back, my salary was very low. Today I find it is inadequate for my future needs. I have already crossed 50. Any cover I take now will mean a very high premium. What plan would suit me?
—Baljit Arora
You should have a clear goal towards which you should buy a life insurance policy. At this stage, if you are looking towards savings for retirement, it is advisable to buy a pension plan. If your need is to replace income for your family in case of death, or to cover any liability, you should go for pure term insurance.
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First Published: Tue, Feb 16 2010. 09 33 PM IST