Life insurance financial secures a family from the unfortunate demise of an earning member of the family. While the need to get one is not debated, the question of how much cover you should get is.

Many insurance companies are advertising the Rs 1-crore insurance cover plans. While the number looks big on paper, it may prove practical in the long-run.

If you live in a city, have dependents and are the breadwinner of the family, Rs 1 crore becomes necessary. It may even be insufficient if you do not have a separate health cover. Consider the following:

• Living expenses in the city
• Inflation
• Debt obligations like home loan
• Increasing costs of education
• Increasing costs of medical care
• Child's marriage costs
• Needs of your spouse post retirement

These are some of the basic expenses that you will leave behind for your family.

If you have a big family, will even Rs 1 crore be sufficient to leave your family comfortable for a long time?

Things to consider when you decide the life insurance cover amount

If you go to a life insurance agent, they have several calculation methods that help you decide the cover amount based on your salary and other factors. These other factors include but are not limited to:

1. Age:

The younger you are, the smaller the premium burden. It is wise to start early. For a Rs 1 crore cover, your annual premium should come to less than Rs 7,000.

2. Income:

If you earn well, your family will be accustomed to a certain lifestyle which will require you to seek a bigger life cover. Additionally, your pay will decide how much amount you can set aside to pay the premium or make other kinds of investments to build wealth.

3. Number of dependents

4. Debt obligations:

You may have a home loan, mutual fund investments, child's school fees and other regular obligations that you need to make a payment towards. Not only does it help you decide how much you can set aside for premium but also how much debt responsibilities you leave behind for your family.

5. Life insurance becomes an immediate aid after demise:

On your death, the first lumpsum aid your family receives would be life insurance corpus. In these cases all your other investments like stocks, bonds, etc would take longer for the nominees to encash.

6. Benefits of the insurance plan:

Do not go after the cheapest premium. It is very important to look at the benefits the insurer provide, the inclusions and exclusions. For example, the 'accident death benefit' secures the policyholder's family an additional payment over the sum assured if the policyholder dies due to an accident during the term of a policy.

There are other clauses like the 'premium waiver' clause where the policyholder is exempt for paying a premium if he/she loses his/her income-earning ability due to disability following an accident. Death and disability are both important to be covered as these majorly disrupt the income inflow in a family.

7. Health insurance:

Just like death, illness is also unprecedented. Which means that you need to have an efficient life insurance policy cover. If your family has a history of health complications, get insured for the specific kind of illness, like diabetes-associated illnesses or heart insurance. Opt for a separate health insurance policy, if needed.

It is important to get one considering that even a minor surgery could also could as much as Rs 10 lakh. This is excluding other hospital and medicinal expenses post-surgery. There are Rs 1 crore health insurance covers as well.