Term vs endowment / ULIP
Term pays only on death; endowment and ULIPs mix insurance with investing.
Why it matters
Term gives 10–20× more cover for the same premium.
What to check
Savings plans returning only 4–6% a year after charges.
Personal finance
Life Insurance (India)
Indian life insurance is often sold as savings: endowment plans, ULIPs and 'money-back' policies. For most families the job is simpler — a pure term plan that pays a large sum if you die during your earning years, at a low yearly premium.
Quick answer
Buy pure term insurance, not endowment or plans.
Cover about 15–20× your yearly income plus outstanding loans.
Keep the cover until you retire, around age 60–65.
Disclose every health and smoking detail honestly.
Find your fit
A few questions about your situation, not about the product.
0/20
Add one short need not covered above.
Answer all 3 questions to see the spec sheet to shop with.
The spec sheet, decoded
Sum assured
The amount your family receives.
Why it matters
Aim for 15–20× yearly income plus loans, minus existing savings.
What to check
Cover set by what the agent quotes, not by your family's needs.
Policy term
How many years the cover lasts.
Why it matters
Cover your earning years until dependants are independent.
What to check
Whole-life cover to 99 that costs much more.
Claim settlement ratio
Share of claims the insurer paid.
Why it matters
Look for 97%+ consistently over three years.
What to check
A single good year; also check the amount settlement ratio.
Disclosure and Section 45
Honest answers on health, habits and income.
Why it matters
After 3 years a claim cannot be refused for misstatement, but early claims can.
What to check
Agents filling forms for you or hiding smoking or illness.
Riders
Add-ons like critical illness, accident or waiver of premium.
Why it matters
Waiver of premium and accidental disability are often worth it.
What to check
Critical illness riders weaker than a standalone health plan.
Return of premium (TROP)
Term plan that refunds premiums if you survive.
Why it matters
Costs far more; the extra invested elsewhere usually grows more.
What to check
Being sold it as 'free insurance'.
MWP Act policy
Policy under the Married Women's Property Act.
Why it matters
Payout goes only to wife and children, safe from creditors.
What to check
Must be chosen when buying; cannot be added later.
Before you pay
- ✓Calculate cover: 15–20× yearly income plus loans.
- ✓Compare pure term plans only, on premium and claim record.
- ✓Fill the proposal form yourself and disclose everything.
- ✓Choose a term that ends at retirement age.
- ✓Tell your nominee where the policy documents are.
Common traps
- !Endowment or money-back plans sold as safe savings.
- !ULIPs pitched by bank relationship managers.
- !Hiding smoking, alcohol or past illness to cut the premium.
- !Return-of-premium plans that cost twice as much.
- !Relying only on the small group cover from your employer.
₹1 crore (≈$120,000) term cover for a healthy 30-year-old non-smoker often costs about ₹10,000–₹15,000 (≈$120–$180) a year.