Why is any Insurance coverage enough or not enough? Let's understand through an example.

Rohan, a 34-year-old software engineer, is married to Priya, and they have a 4-year-old son, Ayaan. Rohan is proud because he "checked the box"—he bought a ₹1 Crore term insurance policy years ago. He feels secure.

The Turning Point: Rohan sits down one Sunday with a cup of coffee and a calculator. He starts thinking about the "What Ifs."

• The Debt: He realizes his home loan in Hyderabad is ₹65 Lakhs. If he’s gone, the bank takes the first ₹65 Lakhs of that insurance money.

• The Remainder: That leaves Priya with ₹35 Lakhs.

• The Reality Check: Priya’s monthly household expenses are ₹60,000.

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  “Wait,” Rohan thinks. “₹35 Lakhs invested at a safe 7% return only gives Priya ₹20,000 a month. That’s not even half of what she needs just for groceries and bills!”

The Escalation: Then he thinks about Ayaan.

• Education inflation is nearly 10-12%.

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• In 14 years, a decent engineering or medical degree won't cost ₹15 Lakhs; it might cost ₹40 Lakhs.

• His ₹1 Crore cover, which sounded like a "huge" number 5 years ago, is suddenly looking very small.

The Resolution (The Lesson): Rohan realizes he was "insured" but not "sufficiently insured." He reaches out to a professional who helps him calculate his Human Life Value and explains the 10x thumb rule. He learns that his cover should actually be ₹3 Crores to account for the home loan, his son’s future, and a monthly income for Priya.

The Math of Peace of Mind

If Rohan had opted for a ₹3 Crore cover, the story would have changed completely. After the bank is paid the ₹65 Lakhs for the home loan, Priya would have ₹2.35 Crores remaining.

Invested conservatively at 7%, this generates approximately ₹1,35,000 in monthly interest income. This doesn't just pay the bills; it allows Priya to maintain their lifestyle and continue saving for Ayaan’s dreams—all while keeping the original ₹2.35 Crore capital untouched for the future.

The Bottom Line

Simply picking a round number, such as ₹1 Crore or ₹2 Crore, is rarely enough. True "sufficiency" must factor in your age, current liabilities, family requirements, and future inflation.

Take action today: Check whether your current coverage is at least 10 times your annual income. If it isn't, reach out to your advisor to bridge the gap. Your family’s future shouldn't be left to guesswork.

Thanks for reading! For a personalized insurance audit, connect with Sunil Keshetti at Vashishta Associates.