Term Insurance: How Big Should Your Cover Be?

Current Annual Income
Your coverage is directly linked to your current annual income, which is why it is important to factor in your current income and expenses that you regularly incur while purchasing your term cover. 

1. Premium payments change with the change in the coverage amount, so if you opt for a large cover, you can expect the premium to be on the higher side and vice versa. Moreover, the ability to pay the premium depends on your current income, which is why you need to assess your income and expenses to ensure enough savings for the premium.
   
   
2. Your current income indicates the pattern in lifestyle. So, when you grow old, it can be obviously inferred that your income should be X times your present income, where X would be determined by taking into consideration the inflation. Initially, X was 10 times, but with the present rise in the cost of living, X can be set at least 20 times.
   
   

Current and Future Financial Liabilities
Besides, financial security, one of the basic aspects of seeking term insurance is to meet your financial liabilities, both current and future. In case you have a loan to your name, you would not want its burden to befall your dependents after your death. Therefore, it is essential to purchase adequate term insurance coverage that would cover the credit as well as ensure that your dependents do not face financial burden in your absence. Furthermore, if you have financial assets to your name such as savings account, mutual funds or stocks, you will only require a limited sum assured to ensure the financial protection of your dependants.

Short-Term & Long-Term Financial Goals
Most individuals have a specified set of financial goals to achieve in their professional career. These short-term & long-term goals are crucial in determining your term life coverage. Most of these financial goals revolve around financial security of self and the family members such as owning a house, marriage, children's education, etc. Term insurance plans can be of great help to such individuals on the path of moving towards their respective goals.

Choosing of Riders
There are varieties of insurance riders available for you by many insurance companies, which can broaden the scope of your coverage. However, these riders are applicable for certain and are directly linked to it. Therefore, one must be careful while choosing these rides so as to get the maximum benefit out of it. For instance, an accident rider can financially protect you from an event of an accident, thereby taking care of all the medical expenses, while also providing an additional amount of money even when you are disabled or do not survive the accident. Similarly, is the case with critical illness rider or premium waiver rider. Therefore, your option to choose the rider modifies your coverage accordingly.

Age at the Time of Buying the Policy
The age of the policyholder is the most basic parameter because the greater the age, the greater is the probability of any unwanted mishappening. So, this factor influences your coverage up to a large extent. However, most insurance companies list down the policy premium, vis-à-vis the age, in a simple tabular format, which makes it quite easy for you to decide on your coverage.

With all the information available at your disposal, it would be fairly easy for you to evaluate your requirements and accordingly calculate your coverage. In the case of more information, you can also call customer support or ask for a quote.

Visit PNB MetLife to know more about life insurance, Term Insurance & Term Plan