How much term insurance do you actually need?
Enough to clear what you owe, fund your household for the years it would need, and cover any education you have already committed to, minus what you already hold. Multiples of salary are a quick shortcut; the obligations method is more defensible because it starts from what would genuinely have to be paid.
There is a quick way to size life cover and a defensible way. The quick way is a multiple of your salary. The defensible way starts from what would actually have to be paid if you were not there.
The obligations method
Add up four things.
What must be cleared. Outstanding home loan, car loan, personal borrowing, anything that would otherwise fall on your family. The EMI calculator will estimate monthly repayments and total interest. For the current outstanding balance, use your lender’s latest statement or amortisation schedule.
What the household costs to run. Your family’s annual expenses, multiplied by the number of years they would need supporting. That is not a lifetime for most people: it is the years until the youngest is independent, or until a partner’s income can carry it.
What you have already promised. Education you have committed to, in the money of the year it will be needed rather than today’s.
A buffer. Something for the transition, and for the fact that none of the above is precise.
Then subtract what you already hold. The remainder is the honest gap.
Why the multiple falls short
A multiple of salary is quick and it is arbitrary. It takes no account of a large loan taken last year, or of children who will be independent in three years rather than eighteen.
Two people on the same salary can need very different cover, and occasionally the obligations method shows someone is already adequately covered. That is a useful answer too, and one a salesperson has little reason to give you.
Why bundled policies make this harder
A policy that combines cover with a savings element is difficult to evaluate, because you cannot easily see how much of your premium buys protection and how much buys investment.
Separate them. Ask what the pure cover would cost on its own, and judge the remainder as an investment against the alternatives. Sometimes the bundle still makes sense for the discipline it enforces. Usually it is a weak version of each, and the packaging is what prevents you noticing.
Term insurance is unpopular to sell precisely because it is cheap. That is the point of it.
Protection before growth
There is an order to this that gets ignored constantly. A carefully built portfolio does not survive one uninsured hospital admission, or one earning member’s death with a home loan outstanding.
Get the floor right first. It is not the interesting half of financial planning, it takes about an hour once, and everything else you build sits on top of it.
That is the whole of a risk assessment: what the requirement is, what you already hold, and the distance between them.