So how much insurance does Mr. Mehta really need when he is taking a life insurance policy? How much money should he put aside now to receive the right benefit for his children's higher studies? How much should he save now to receive the right benefit for his daughter's marriage? How much does he want his family to get as a benefit in case of his untimely demise?
He has to consider his priorities. He has to take into account his standard of living, his income, his spending habits, inflation etc. before he arrives at the benefit he wishes his family to receive at the time of his death. This policy should also have a critical illness and disability rider to help in case of his hospitalization and medical expenses. Amazing, how everything was in such clear view to Mr. Mehta. Usually, wisdom's advice is that the death benefit from a life insurance policy should be approximately 8 to 10 times the annual income of the insured. It is wise to include foreseen liabilities and add an inflation rate into the amount to get a more accurate figure.
He also has to decide how much he expects to receive for his children's higher education. He has to factor in what his children's career inclinations are, what type of college he wants his children to attend, whether he wants his children to study in India or abroad, etc. In addition, he has to decide what he will have to spend on his daughter's marriage.
No one can ever get exact figures, but it is important to draw a fair sketch of your future financial goals and save according to them. You may not get it absolutely right, but long term planning, as Mr. Mehta realised, definitely keep you prepared. Mr. Mehta knows that one rupee saved now is worth many more in the future.
Fortunately, Mr. Mehta had trained professionals to help him beat out all his considerations and invest in life insurance to suit his future needs and wants. So Mr. Mehta has now prepared himself much better for an unforeseen future. It will definitely suit our purpose to do the same.