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Through this paper an important issue that what should be the level of insulation for energy conservation in conditioned building envelope is being address. It is well established from the earlier studies of heat transfer across the composite walls that as insulation thickness increases the corresponding resistance to heat flow increases so the rate of heat transfer decreases. The corresponding cost of maintain temperature through artificial means decreases but this is achieve at the cost of insulation which also increases as its thickness increases. The thickness of insulation where total cost of heating/ cooling and insulation cost over the life time becomes minimum is known as optimum insulation thickness. Answer to this question of thermal insulation level in the building envelope components like external wall or roof from economy point of view is being reviewed. Different angles of research in this field being discuss like methods of analyzing annual heating/ cooling loads, insulation material point of view, effect of climate, effect of energy source on optimum insulation thickness. Further different methods used for determination of optimum insulation thickness being reviewed. The effect of solar radiation on optimum insulation thickness is an area which needs further research in Indian context. There is a great need of not only insulating building envelope components like external wall or roof but from economical point of view there is a need to optimize insulation thickness. Further there is need to analyze two insulation materials in combination for maximizing savings.