1. How to Calculate Term Insurance:

• Monthly Expenses Formula:

  • Multiply monthly expenses by 200 to calculate the term insurance amount needed.
  • Example:50,000 monthly expenses50,000 × 200 =1 crore coverage.
  • This ensures the family earns ~?50,000/month from Fixed Deposit returns at 6% interest.

• Annual Income Formula:

  • Choose a coverage amount 15-20 times your annual income for sufficient protection.
  • Example:10 lakh annual income Coverage of1.5 to2 crore.

2. Determining the Policy Term:

• Cover Earning Years:
  • Choose a term that extends at least until retirement (age 58-60).
• Loan Coverage:
  • If purchasing to cover liabilities like a home loan, match the term to the loan repayment period.
• Longer Terms:
  • Opt for the longest term offered if affordable, for extended protection.

3. Buying Term Policy Under MWP Act:

• Protection for Family:
  • Policies under the Married Women’s Property (MWP) Act ensure the payout goes directly to the wife/children.
  • It cannot be attached by creditors to repay debts or liabilities.
• Who Should Use MWP Act:
  • Ideal for married individuals with liabilities to secure the family’s financial future.

Summary of Benefits of Term Insurance:

• Financial Security:
• Provides replacement income for the family after the policyholder’s death.
• Tailored Terms:
• Covers liabilities like loans and future expenses, ensuring peace of mind.
• MWP Act Advantages:
• Protects the payout from legal claims, ensuring family financial independence.

Action Steps:

• Calculate your required coverage using monthly expenses or annual income.
• Align the policy term with your earning years or liability duration.
• Consider using the MWP Act for added protection.

This proactive approach ensures your family remains financially secure even in unforeseen circumstances.

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