What amount of life insurance one should buy? How much really need?

How Much Life Insurance Do I Need?

Life Insurance needs analysis worksheet: Life insurance is very important for every person. Family can face difficult times at any time. So it is better to stay alerted before anything goes wrong. Life insurance helps the family during a financial crisis. It is hence necessary that while taking insurance we take care of needs of our family.

Many times to save tax and for investment one takes insurance plan but the amount is very less. As a result, ones family has to pay for this mistake. Hence everyone should understand that what amount of insurance is actually needed by the family. This article is meant to make readers understand the same thing.

If there is only one person earning in the family then it is very necessary that the family left behind gets regular income. For instance, if monthly income of a person in the house is Rs. 25,000 then it is necessary that after the death of that person the family left behind gets the same Rs. 25,000.

Also, the insurance taken should be of such kind that it can face the inflation in future. For this, it becomes necessary that one should take care of increasing responsibilities of the family. The necessity of life insurance increases more after marriage and birth of a child.

Human Life Value (HLV)

Expected income of any insured person is Human Life Value (HLF). First of all, calculate your annual income. Now subtract the amount that is spent on oneself. The leftover amount is Human Life Value.

For instance, an annual income of a person is Rs. 12 Lakhs and total amount spend on self is Rs. 3 lakh rupees. This means that person earns Rs. 9 lakh for his family every year. Hence one can make out that if a person dies then the family will at least need Rs. 9 Lakhs every year. So this person should always remember this calculation while buying life insurance.

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