Steps to Calculate Your Economic Value & Life Insurance Needs

Economic value is a value which you earn till your retirement and this value help you to keep your social/economic/family status remain unchanged in the society.

Economic Value = Annual Income x1.5 x (60- Current Age)

e.g. If your current age is 25 years & your annual income is Rs.5,00,000/- per annum, then your economic value would be [500000x1.5x(60-25)] Rs.2,62,50,000.00

If you die or become disabled/unemployed before attaining age of 60, your family will loss this economic value. But you can kept remain unchanged this value by investing a little amount of your income in some better investment  avenue like Insurance, PPF etc.

As per expert advice, a man should have to be insured at least 10 times of amount of his annual income.

Now check your economic value and decide where are you right now??

Calculate Your Life Insurance Needs

·         Know your Family Income and Expenses – Earning – Expenses

·         Know your Family’s one time needs – Child’s Wedding + Education, home Loan + Other expense

·         Know your current assets – Cash + Savings + Investments + Existing Life Insurance

·         Your Calculation = Total Requirements (1 +2) – Existing Assets (3) = Insurance needed.

Reasons you need to increase insurance cover

·         Your parents retire

·         You get married

·         You become parents

·         You take a big loan

·         You start a business

Circumstances when you don’t need insurance

·         You don’t have dependents

·         You have enough assets

·         Your spouse earns well

·         You have retired

A consumer awareness intitiative by Citizens Advice Bureau India