'Get Term Life Insurance' Is Common Advice. Almost Nobody Says How Much Coverage That Actually Means
5 min read
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5 min read
Your friend says, "Just get term life insurance." You agree. Then the agent asks one question: "How much coverage do you want?"
You freeze. Rp500 million? Rp1 billion? Rp5 billion? Most people pick a round number that feels safe and move on. That is a guess, and a guess can leave your family short.
So how much term life insurance coverage do you need? This post gives you a simple way to work it out yourself, with real rupiah, in four steps.
Term life insurance pays money to your family if you die during a set period, for example 20 years. If you live past the period, it pays nothing. That is why it is cheap.
The amount it pays is called the uang pertanggungan (sum assured, or coverage). It is the number on the policy. Your family gets it in one lump sum.
Here is the key idea. This money has one job: to replace what your family would lose if you were gone. So the right amount depends on your life, not on a round number.
The fastest method is the multiple approach. You take your yearly income and multiply it.
Many insurance guides, such as those from US comparison sites like Policygenius and MoneyGeek, say 10 to 15 times your yearly income is a starting point. Indonesian guides, such as Cermati's, describe the same multiple approach and call it the easiest but least accurate method.
Example: you earn Rp12 million a month. That is Rp144 million a year. Ten to fifteen times is Rp1.44 billion to Rp2.16 billion.
It is quick. But it ignores your debts, your kids and what you already own. Two people with the same salary can need very different amounts. So use it only as a sanity check.
The more accurate method is the needs approach. You add up what your family would have to pay for, then subtract what they already have.
A well-known version is called DIME. It stands for Debt, Income, Mortgage and Education. Let's use the same four ideas, adjusted for Indonesia.
Then you subtract the money your family could already use: savings, investments and any other insurance.
Coverage = Debts + KPR balance + Income to replace + Education − Savings and investments
Meet Rina. She is 32, earns Rp12 million a month and has a husband and a two-year-old. All numbers below are made up to show the method. They are not real data.
| Item | Amount |
|---|---|
| Other debts (motorbike loan, credit card) | Rp20 million |
| KPR balance still owed | Rp300 million |
| Income to replace: Rp144 million a year for 10 years | Rp1.44 billion |
| Education for her child (school and university) | Rp200 million |
| Total family needs | Rp1.96 billion |
| Minus savings and investments | Rp250 million |
| Coverage needed | Rp1.71 billion |
Rp1.71 billion is about 11.9 times her yearly income. That sits inside the 10 to 15 times range from the quick rule. When two methods land close together, that is a good sign.
Notice what changed her number. If her KPR were paid off, she would need Rp300 million less. If she had Rp1 billion in investments, she would need far less. Your answer will differ from hers, and that is the point.
Using a flat round number. "Rp1 billion" is not a plan. It might be too little for Rina and too much for a single person with no debt.
Ignoring that inflation raises costs. The example above counts a flat Rp144 million a year. In real life, prices rise, so a family would need more later. Treat your total as a minimum, not a ceiling.
Forgetting to update. Your need changes. A new baby, a new loan or a raise all change the math. Many people redo the calculation when life changes, for example after a move, a child or a new KPR.
Also match the term to the need. The income and KPR parts of the number only matter while the kids are young and the loan is open. That is why the policy period often runs until the youngest child is grown or the KPR ends.
Insurance is still not widespread here. OJK's 2025 national financial literacy and inclusion survey (SNLIK), reported by Kontan and Bisnis, found insurance inclusion at 28.50 percent, up from 12.21 percent in 2024. Insurance literacy was 45.45 percent, up from 36.90 percent.
Inclusion means how many people actually use insurance products. So even after a big jump, fewer than three in ten adults do. Many families have no safety net if the main earner dies, and a rough guess is better than nothing. A calculated number is better still.
You cannot subtract savings you have not counted. The "Savings and investments" line in the formula is the one most people get wrong, because their money sits in many places.
Open your NetWort Dashboard and look at your total portfolio value and allocation. That is the number to plug into the last line of the formula, and it takes a minute.