I am 25 and earn Rs 3 lakh annually. I want to buy a life insurance policy for myself. What is the maximum amount of sum assured that I can have?
A ballpark insurance cover on which most life insurers work on is to limit the sum assured
I am 25 and earn Rs 3 lakh annually. I want to buy a life insurance policy for myself. What is the maximum amount of sum assured that I can have?
Jaya Banerjee, Kolkata
Generally there is no upper limit on the sum assured that you can take for your life insurance. But, insurers have their ways to introduce a ceiling on how much insurance you can take on your life. Such caps are introduced to check on the possibility of cheating. For instance, if you take Rs 5 crore insurance and commit suicide after a year, so that the policy proceeds go to your parents; it would be helping them profit financially from your death, which has moral issues. A ballpark insurance cover on which most life insurers work on is to limit the sum assured at about 20 times one’s annual income or 10 times depending on the age of the prospective policyholder. More than the quantum of cover, as you may argue that your life is priceless, you need to understand if you will be able to afford paying premiums and managing the policy for the long run.