- Financially stable families often lack adequate insurance coverage.
- Coverage must account for debts, income, education, and parents.
- Employer insurance is temporary; personal policy ensures family stability.
By Sanjiv Bajaj
Over the years, we have noticed something interesting about financial vulnerability in India. The families most exposed are often not the ones earning the least. They are usually the ones earning just enough to feel secure.
Particularly in the Rs 20-50 lakh income bracket.
These are professionals who have built stable, aspirational lives, a home on EMI, children in good schools, ageing parents who depend on them, investments running through SIPs, and a lifestyle that reflects years of hard work. From the outside, they appear financially settled. But many are far less protected than they imagine.
I remember speaking to a client in his late 30s, a senior corporate executive earning roughly Rs 35 lakh annually. He had an apartment in Gurugram with a sizable home loan, two school-going children, and parents whose medical expenses he supported every month. He also had a Rs 75 lakh life insurance cover through his employer, which he believed was adequate.
When I asked him how he had arrived at that number, he admitted he never really had. It was simply the cover provided by the company. So I asked him a different question.
If your income stopped tomorrow, how long could your family continue living exactly as they do today?
After a pause, he said, “Maybe a year.”
That answer captures the core issue with how many salaried professionals think about insurance today.
As incomes rise, liabilities rise alongside them. But insurance planning often remains static.
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Why Traditional Insurance Formulas Fall Short
The traditional “10 times annual income” formula for term insurance may have worked in a simpler financial environment, but it rarely captures the realities of modern urban life. It does not account for rising education costs, long-tenure home loans, healthcare inflation, or the growing responsibility many professionals carry toward ageing parents.
The better way to think about term insurance is not as a random number, but as income continuity for the family.
The first thing any insurance cover should account for is outstanding debt. A family should not have to deal with both emotional loss and financial liabilities at the same time. Home loans, car loans, and other obligations should ideally be extinguished immediately if the primary earner is no longer around.
The Importance Of Income Replacement
Then comes income replacement.
A lump sum may sound large in isolation, but monthly living costs accumulate over decades. A household spending Rs 1.5 lakh a month today requires stability, not just a one-time payout. The goal of insurance is to ensure the family’s lifestyle and long-term plans do not collapse under financial pressure.
Children’s education is another area where families consistently underestimate future costs. Education inflation in India has remained significantly higher than general inflation for years. A course that costs Rs 15 lakh today could easily cost more than Rs 40 lakh a decade later. For families aspiring toward professional degrees or overseas education, the numbers rise even faster.
And then there are parents.
For many Indian professionals, financial responsibility extends beyond the nuclear family. Monthly support, medical treatment, and emergency healthcare expenses often become permanent obligations. Yet these realities are frequently excluded from insurance calculations.
When all these responsibilities are added together honestly, the required coverage is often much higher than people expect.
For a professional earning Rs 20 lakh annually with a home loan, dependent parents, and two children, realistic protection needs can easily move toward Rs 1.5-2 crore. At Rs 30-50 lakh income levels, especially in metro cities, the number frequently rises to Rs 3-4 crore depending on lifestyle and liabilities. And yet many families continue relying primarily on employer-provided group insurance.
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The Risk Of Relying Solely On Employer Cover
This creates a false sense of security.
Employer cover is useful, but it is not a long-term protection strategy. It exists only as long as employment continues. Career breaks, job switches, entrepreneurship, or layoffs can suddenly leave families uninsured during the years when responsibilities are actually highest. Insurance planning should be personal, not institutional.
The encouraging reality is that meaningful term insurance remains surprisingly affordable when purchased early and in good health. For many professionals in their 30s, substantial coverage costs less annually than discretionary lifestyle expenses people rarely think twice about.
What is expensive is not insurance. What is expensive is discovering too late that the financial protection a family depended on was never truly enough.
Preserving Financial Stability For The Family
Ultimately, term insurance is not just about numbers or financial products. It is about preserving continuity for the people who depend on you. The home, the education, the routines, the stability, all of it rests on the assumption that income will continue.
The real purpose of insurance is to ensure that if life changes unexpectedly, that stability does not disappear with it.
(The author is Joint Chairman and MD at Bajaj Capital Ltd)
Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP Network Pvt. Ltd.
