I am 41 years old and am planning to take an insurance policy. I am confused as to how much I should insure for.
Suresh Kumar Sinha, Patna
The basic purpose of insurance is to provide financial security to the dependants in the event of death of the insured. Therefore, the best method to determine the amount of insurance is to imagine the financial needs of your dependants when you are no longer around to provide for them. The sum insured should be an amount which will generate an income sufficient to meet the projected expenditure. You must also take into account the fluctuating interest rates. From this sum thus arrived, you need to reduce the already accumulated savings. After calculating how much insurance is required, you need to look at the current investible surplus for payment of premium. If not in one shot, then you may build the sum insured over a period of time.
