Planning to buy term insurance? Restrict premium to 5% of annual income

Calculate life cover by taking goals, expenses and spouse's retirement needs into account

A client of Kolkata-based financial planner Malhar Majumder called him and said he wanted to buy a Rs 5-crore term plan urgently. After experiencing a death in the family, the client wanted to ensure that his wife and kids were financially well protected in the case of his death. But when Majumder calculated the cover needed, it came to around Rs 2 crore. Such behaviour underlines the need to employ a rational approach when calculating a person’s life insurance requirement. 

Deciding what “adequate” life insurance cover is can be difficult. It varies, depending on the method chosen. Insurers work out the