Income Rule

One should buy life insurance cover for a sum which is equal to a certain multiple of your annual net income.  Income here refers to net income, which means, the residue of your salary after paying for your personal expenditures. This method is one of the simplest methods of ascertaining your need for life insurance. For example, if  a 30 year old professional who earns Rs 2,50,000 per month and spends Rs 25,000 towards personal expenditure per month, should buy life insurance worth ( (250000-25000)*12) *12 = Rs 3,24,00,000.