Why Should You Opt for Term Insurance?
- Secure Your Family’s Future
- In your absence, it ensures your loved ones can maintain their lifestyle, pay off debts, and meet long-term goals.
- Affordable for Everyone
- You get a large cover (e.g., ₹1 crore) at a small premium (e.g., ₹500/month if you start early).
- Helps You Focus on Wealth Creation
- With your risk covered, you can confidently invest in long-term wealth-building tools (mutual funds, SIPs, etc.).
- Provides Peace of Mind
- Knowing that your dependents are financially protected if life takes an unfortunate turn.
- Tax Savings
- Premiums qualify for deductions under Section 80C, and death benefits are tax-free under 10(10D).
- Must-Have for Anyone with Dependents
- Whether you’re married, a parent, or supporting parents—term insurance is essential if anyone relies on your income.
How Term Insurance Is Different from ULIPs – and Why Term Wins
| Feature | Term Insurance | ULIP (Unit Linked Insurance Plan) |
|---|---|---|
| Purpose | Pure protection | Insurance + Investment |
| Returns | No returns (only payout on death) | Market-linked returns (variable) |
| Premium | Low | High (due to investment + insurance) |
| Transparency | Simple & easy to understand | Complex structure with hidden charges |
| Flexibility | You choose your investment tools separately | Limited control over fund choices |
| Ideal For | Family protection only | If you want investment + forced savings in one |
| Claim Settlement | Straightforward | Can get complicated due to NAV-based fund value |
Better Coverage: With the same premium, you get 5–10x more cover than a ULIP.
Focused Purpose: You don’t mix insurance with investments. Keep both separate for clarity and efficiency.
ULIP = Compromise: Neither best for investment nor best for insurance.
Key Insight
How to Choose the Right Term Insurance Plan
- Choose Adequate Cover (10–20× Income)
- Buy Early to Lock Low Premiums
- Select Policy Term till Age 60–70
- Disclose Truthfully (Health, Habits, Job)
- Choose Reputed Insurer (95%+ Claim Ratio)
- Add Riders (Critical Illness, Accidental Death, etc.)
Frequently Asked Questions (FAQs)
Q1: What happens if I survive the policy term?
A: You don’t receive any maturity benefit. It’s a risk-cover policy, not a savings plan.
Q2: Isn’t a policy with return of premium better?
A: These cost much more. You’re better off investing the difference separately.
Q3: Can I upgrade or increase cover later?
A: Some insurers allow it on milestones (marriage, child), but buying high cover early is smarter.
Q4: Can I have multiple term plans?
A: Yes. You can split cover across companies or buy additional plans later as income increases.
Q5: Is term insurance better than endowment or ULIP?
A: For pure protection, yes. Other plans compromise either protection or returns.
Final Thoughts
👉 “Protect first. Grow next.” Start with term insurance, add health insurance, build an emergency fund, and then move on to wealth creation.