Q: I am a 38-year-old software engineer with a term insurance policy of ₹1 crore that I purchased five years ago. My wife is a homemaker; my family has grown with two children aged 3 and 1; we’ve moved to a larger home with a substantial mortgage. Given these significant life changes, I’m concerned that my current coverage may no longer be sufficient. How should I reassess my insurance needs considering factors like increased living expenses? - Karan
A. Life in the late 30s often marks a clear shift in priorities. While career growth typically brings higher income and stability, it also coincides with a sharp increase in financial responsibilities. A single-income household and a sizeable home loan further compound these responsibilities and materially alter the risk landscape. A term cover that felt adequate five years ago may no longer fully reflect today’s obligations, making it essential to revisit your life insurance cover.
To determine whether you are underinsured, it is important to adopt a comprehensive protection assessment one that goes beyond simple income multiples and instead evaluates your actual financial landscape, including liabilities, dependents, lifestyle costs, and future goals.
When recalculating an adequate life insurance cover, consider these four critical areas:
Financial Liability: Your mortgage is now your largest liability. In the event of an untimely demise, your insurance should first ensure that your family can keep their home. Your cover should, at a minimum, equal your outstanding loan balance.
Income Replacement: Since your wife is a homemaker, she relies on your earning capacity to manage daily living expenses. Calculate your annual household expenses (adjusted for inflation) and multiply them by the number of years until your youngest child reaches financial independence.
Future Milestones: With children aged 3 and 1, you are looking at around two decades of education costs. Higher education in India (and abroad) sees significant inflation. Your policy should include a corpus specifically earmarked for their education.
The “Safety Net” Buffer: This accounts for immediate expenses such as medical bills, and essential administrative expenses and an emergency fund for your spouse to navigate life without immediate financial stress.
How to review and enhance your term insurance cover:
Begin by evaluating how much life insurance coverage you need today, not what felt adequate a few years ago. Take into account your home loan, household expenses, rising living costs due to inflation, your children’s future needs, and the years your family would depend on your income. This helps arrive at a realistic level of financial protection.
Next, study your current term insurance policy in detail. Check the sum assured, policy duration, premium affordability, and whether the plan allows increases in coverage at key life stages. Many insurers offer options to enhance cover after events such as childbirth or a home purchase, sometimes without additional medical tests.
Compare your existing coverage with your revised financial protection needs. If your current policy does not fully cover outstanding liabilities, replace your income for your family, or provide for long-term goals like children’s education, in case of a shortfall in financial protection.
To bridge this gap, you can either increase the sum assured within your existing policy through a top-up or life stage benefit (if allowed) or buy an additional term insurance policy linked to specific needs such as your home loan. This allows you to maintain higher coverage during years of greater responsibility with flexibility to adjust later.
Having adequate life insurance cover is more important than simply owning a policy. Reviewing your term insurance periodically ensures it keeps pace with changing responsibilities and continues to provide strong financial security for your family.
The writer is Head, Product Development and Strategy, Bajaj Life Insurance
Published on March 28, 2026
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