Life Insurance is not for the benefit of the insured person, but it is for the person s loved ones.

Its primary purpose is to enable your family to continue their current lifestyle when and if you are no longer around.

Calculating how much life insurance you need is one of the most important financial decisions you will ever make. There are many ways to determine how much insurance one needs: Income Replacement Value Approach Human Life Value Approach Need Analysis Approach Capital Retention Approach

Under this method, the various family needs that must be met if the family head should die are analyzed and the amount of money needed to meet those needs is determined. The amount of existing life insurance and financial assets is then subtracted from the total amount of capital needed to determine the amount of new life insurance that should be purchased.

1. 2. 3. 4. 5. 6.

Estate Clearance Fund Income during the readjustment period Income during the dependency period Life Income to the surviving spouse Retirement Needs Special Needs:
Mortgage Redemption Fund Educational Fund Emergency Fund

Add up your short term financial needs. Add up your long term obligations. Calculate family maintenance expenses. Figure out what resources you already have. Subtract your resources from the amount of capital needed. 6. The final figure represents the amount of life insurance you should buy. 1. 2. 3. 4. 5.

Life-Cycle Period 18-25 years: May be in higher education or first job or probably unmarried without dependents. 25-40 years: May have married with kids/moderate income with high expenses, large debts, etc. 40-60 years: Children become independent, income may be increase, debts reduced Above 60 years: Normally retired life

Financial Needs Needs support from parent / might be paying off study loans, saving for future needs. Loans for car / house, savings for child s education/marriage, may start savings for retirement needs. Savings for retirement, provision for health expenses Regular inflow of money for self-maintenance, health needs, leisure needs

Solutions Savings product may be tried, as protection needs do not exist.

Term plans(duration linked to dependency period) Convertible plans Mortgage redemption plans Child plans Endowment plans(with profit) Unit-linked plans Health riders Retirement plans Immediate annuities

Single People Single Parent Families Two-income Earners Traditional Families Blended Families Sandwiched Families