Policies worth more than ₹2 crore accounted for 34% of term insurance sales in FY26, but the right level of cover depends on income, debts, dependants and future goals , not a headline figure.
A cover amount of ₹2 crore is increasingly surfacing in term insurance conversations, but the figure is only useful if it matches a household’s real exposure. News18, citing a major insurance marketplace, said policies with cover above ₹2 crore accounted for 34% of term insurance sales in FY26, up from 24% in FY25, helped by lower protection-plan costs after the GST exemption and a wider focus on whether existing life cover is sufficient. Yet the right question is not whether ₹2 crore sounds generous, but whether it is enough to replace income, service debt and protect future plans if the main earner dies.
That calculation begins with income replacement. Guidance from term insurance providers and insurers, including HDFC Life and KHG Insurance, says families should think about the earnings a household would lose, how long that gap might last and which dependants would be affected. In practice, that means a younger policyholder with a spouse and children may need far more protection than someone whose children are financially independent and whose major obligations are already behind them. A round number is no substitute for a needs-based assessment.
Loans are the next step. PolicyX and Nyvo both outline a liability-based approach that starts with debts such as home loans and other borrowings, then adds household expenses and long-term goals before subtracting liquid assets and existing cover. That framework matters because a policy that appears large on paper may already be partly allocated to clearing liabilities. A ₹60 lakh mortgage and other outstanding obligations can quickly absorb a meaningful share of a ₹2 crore payout, leaving less to support day-to-day living costs.
Future goals also deserve attention. Education, weddings and later-life support for a spouse can be a major part of the protection requirement, especially because those needs tend to rise with inflation. Insurers and coverage guides also note that premiums generally move with the size of the sum assured, which is why the cover amount should be chosen carefully rather than by chasing the highest possible figure. A larger policy can offer more protection, but it should still be tied to an actual financial gap.
That is why broad rules such as 10 times annual income can only be a starting point. They may work as a rough screen, but they do not capture every household’s debts, savings, dependants or long-term commitments. The more practical approach is to work from the top down: estimate the income a family would lose, add liabilities and future goals, then offset any savings, investments and existing insurance that would genuinely be available. On that basis, ₹2 crore may be more than enough for some households and nowhere near enough for others.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
