Invest In India

There is never a right or a wrong amount of insurance. If an amount of
Rs. 5,00,000 is the right amount of insurance for your friend who has the same income, and is of the same age like you. Even then, it essentially might not apply in your case too. There are lots of things which need a consideration for choosing the right amount of Insurance for a person. A brief description of the same has been under mentioned to help you.

1. Annual Income of the person – For your family to continue living a comfortable life like they do, with you being around them. It’s a thumb rule that your Insurance amount should be atleast 6 to 8 times of your pay.
2. Your dependents – The number of dependents in your family is directly proportional to the amount of insurance you need for your family.
3. Compute your expenses – You need to sum up the total expense that you incur through out the month to maintain a certain living standard for your family. So that is the amount of money you would need from the insurance to keep things going, when the income from your end stops. Also do not forget to keep in mind the inflation rates.
4. Savings – Have you created any savings for your family, on which they could fall back. Just in case misfortune strikes.
5. Your current debts – In case you have purchased a house or a car recently with the help of a bank loan then it becomes all the more essential that you consider covering them all with insurance. Else if just in case some thing happens to you, then chances are your family would be in a soup, with those liabilities on the head and no income. Also chances are they would loose all that if the payments are not made for the same on time.
6. Needs of the Future – You ought to have a foresight to see the kind of needs those are going to arise in your family, in the near future or the distant future. Like higher educations, marriage of your daughter, illness in the family etc. So you ought to plan for all those expenses and then compute the insurance cover that you should ideally go for.
7. Tax cover – If you are buying insurance today just with the motive to cover your taxable income, probably that is being very unwise of you. You ought to consider the unpleasant situations and circumstances that your family might face and then buy them for the right amount. If tax benefits come along with it then the same is ought to be considered as a bonus received.