Overview

The press release dated 29 September 2026 provides a step‑by‑step guide for individuals to evaluate whether the sum assured in a term insurance policy is sufficient to meet their family’s financial needs.

Sum Assured Adequacy Definition

Sum assured adequacy is defined as having enough life‑insurance coverage to support a family’s expenses in the event of the policyholder’s death during the term. The adequacy depends on income, liabilities, dependents, existing assets, and future financial goals.

Estimation Methodology

The release recommends assessing five key components:

1. Income Replacement – estimate the annual income that must be sustained for the family.

2. Outstanding Liabilities – include debts such as home loans or personal loans.

3. Future Financial Goals – account for expenses like children’s higher education or marriage.

4. Existing Financial Resources – subtract savings, investments, and any existing life‑insurance cover.

5. Inflation Adjustment – factor in price escalation over the policy horizon.

A simple formula is suggested: Estimated sum assured = Income replacement + Outstanding liabilities + Future financial goals + Inflation adjustment – Existing financial resources.

Example Calculation

Using a hypothetical profile, the release illustrates the calculation:

  • Annual income: ₹12 lakh
  • Home loan outstanding: ₹40 lakh
  • Projected education expenses: ₹35 lakh
  • Desired income replacement: ₹1.2 crore
  • Existing savings: ₹15 lakh

Applying the formula yields an estimated coverage requirement of ₹1.8 crore. The note suggests that a ₹2 crore term‑insurance policy could be appropriate if it aligns with the individual’s financial responsibilities, long‑term goals, and premium budget.

Five Considerations When Comparing Term Plans

The release lists the following factors to evaluate across different insurers:

1. Premium Affordability – ensure the premium is sustainable throughout the term.

2. Policy Term – select a duration that matches the period of financial dependence.

3. Claim Settlement Information – review the insurer’s claim settlement record, exclusions, and process.

4. Available Riders – consider optional riders and their additional costs for covering specific risks.

5. Policy Terms and Conditions – read the fine print for eligibility, premium payment requirements, and exclusions.

Reassessment Guidance

It advises policyholders to revisit their sum assured after major life events such as marriage, birth of a child, purchase of a home, or taking on a substantial loan. Changes in income should also trigger a review to confirm that coverage remains adequate.

Provider Recommendation

The document mentions Kotak Life Insurance as a trusted provider that can be considered when evaluating term‑insurance options.

Disclaimer

The content is presented as a press release under an arrangement with NRDPL, and PTI disclaims editorial responsibility for the material.