₹10 crore of cover for ₹54,000 a year

₹10 crore of life cover, for about ₹54,000 a year. I bought it last year, at 29.

Most money decisions, I run through a spreadsheet before I trust them. Buying term insurance didn't need one — if people depend on your income, the answer is yes.

The three decisions sitting underneath it are where most people quietly get term insurance wrong.

One — how much cover.

Term insurance replaces one thing: your human capital — the income you haven't earned yet but will. At 29, with two or three earning decades ahead, that number is large — which is why the usual 10-to-15-times-income rule runs light. I anchored on 20x. Properly, human capital is the sum of every future paycheck, discounted to today's value. 20x is the shortcut to roughly that number at my age — and it slides down as you get older, closer to 15x in your 30s, 10x in your 40s. Approximately right and properly covered beats precise and underinsured.

Two — how long the cover runs.

Almost nobody runs this number. Same ₹10 crore cover, total premium across the life of the policy: to age 55 — about ₹14 lakh. To age 70 — about ₹29 lakh. To age 85 — about ₹49 lakh. Extending cover to 70 doubles the bill; to 85, it more than triples. Most of it pays for a risk you'll have already outgrown.

Every year you work, you convert a slice of your human capital into financial capital — the savings and investments in your accounts. Human capital shrinks with age; financial capital grows. Somewhere in your late 50s, the two cross. After that, your family relies on your assets — not your next paycheck. Insure past that crossover and you're paying to protect an income you've already replaced. I set mine to 55.

Three — how you pay.

Two ways. Limited pay clears the policy in 10 to 15 years. Regular pay spreads it across the full term. Limited pay looked cheaper — about ₹6.5 lakh less on the total bill. Obvious choice, on paper. It isn't. Limited pay makes you hand the money over faster. Under regular pay, what you don't pay early stays invested and keeps earning. Count that, and at any sensible return regular pay comes out ahead. Limited pay only wins if you'd have left the difference in a savings account. I chose regular pay.

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The cover amount is only the headline. How much, how long, how you pay — those three decide what it costs you and whether it's worth it. Most people settle the headline and skip the three.

Common questions

How much term insurance cover do I need?

Term insurance replaces your human capital — the income you'll earn over your remaining working years. The common 10–15x annual income rule runs light when you're young: closer to 20x in your late 20s, easing to ~15x in your 30s and ~10x in your 40s. Properly, it's the present value of all your future income.

How long should the cover run?

Only until your financial capital (savings and investments) overtakes your human capital — usually your late 50s. After that crossover your family relies on your assets, not your next paycheck. Extending ₹10 crore of cover from age 55 to 70 roughly doubles the total premium; to 85 it more than triples it.

Is limited pay or regular pay better?

Limited pay (clearing the policy in 10–15 years) looks cheaper on the total bill, but it makes you part with money sooner. Under regular pay, what you don't pay early stays invested and compounds — so at any sensible return, regular pay usually comes out ahead. Limited pay only wins if you'd otherwise leave the difference in a savings account.

How much does ₹10 crore of term cover cost?

As an illustration, ₹10 crore bought at 29 and running to age 55 costs about ₹54,000 a year. Total premium scales sharply with term length: ~₹14 lakh to age 55, ~₹29 lakh to 70, ~₹49 lakh to 85.

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