Quick answer: Buy term insurance, not endowment or ULIP, if your goal is protecting your family. Cover should be roughly 10 to 15 times your annual income, plus outstanding loans, minus existing savings. A healthy 30-year-old non-smoker can get ₹1 crore cover for around ₹10,000 to ₹15,000 a year. The single most important thing is not the premium or the brand: it is disclosing every health condition and habit truthfully, because incorrect or incomplete disclosures can affect a claim.
How much cover you actually need
A simple method that works for most families:
- Income replacement: annual income × number of years your family would need support. For a 30-year-old with dependants, 15 to 20 years is reasonable.
- Add outstanding liabilities: home loan, car loan, personal loans, credit card dues.
- Add future goals: children’s education and marriage costs at today’s prices, adjusted upward for inflation.
- Subtract existing assets that your family could realistically liquidate: savings, EPF, investments, existing cover from an employer.
| Annual income | Rough cover needed | Illustrative annual premium budget — not insurer quotes |
|---|---|---|
| ₹6 lakh | ₹75 lakh – ₹1 crore | ₹9,000 – ₹13,000 |
| ₹10 lakh | ₹1 – ₹1.5 crore | ₹12,000 – ₹18,000 |
| ₹15 lakh | ₹1.5 – ₹2 crore | ₹18,000 – ₹26,000 |
| ₹25 lakh | ₹2.5 – ₹3.5 crore | ₹28,000 – ₹45,000 |
Compare quotes for the same cover, term and payment schedule. Age, health, smoking and underwriting affect premiums; no universal doubling or halving rule applies.
Term vs the products agents prefer to sell
| Term plan | Endowment / money-back | ULIP | |
|---|---|---|---|
| Purpose | Pure protection | Insurance plus savings | Insurance plus market investment |
| Cover for the same premium | Highest | Very low | Low |
| Returns | None; nothing back if you survive | Typically 4%–6% | Market-linked, after charges |
| Charges | Low | Opaque | Multiple: allocation, admin, fund management, mortality |
| Liquidity | N/A | Poor; heavy loss on early surrender | Lock-in of 5 years |
| Best for | Anyone with dependants | Rarely the best option | Rarely the best option |
The reason endowment and ULIP products are pushed harder is commission structure, not suitability. The cleaner approach for most people is term insurance for protection and separate investments for growth, which also lets you change either one independently.
Riders worth considering, and ones to skip
- Worth it: critical illness rider, paying a lump sum on diagnosis of listed conditions. Check the list and the survival period.
- Worth it: accidental death benefit, cheap and meaningful if you travel a lot by road.
- Worth it: waiver of premium, which keeps the policy alive if you become disabled and cannot pay.
- Usually skip: return of premium. It sounds attractive but raises the premium substantially for what amounts to a poor-return savings plan.
- Usually skip: income benefit payout unless you specifically want the money staggered rather than as a lump sum.
Why claims get rejected, and how to avoid it
Insurers reject relatively few claims, but nearly all rejections trace back to the same causes:
- Non-disclosure of health conditions at the time of buying. Declare diabetes, blood pressure, heart conditions, past surgeries and family history. A higher premium is far better than a rejected claim.
- Not declaring smoking or tobacco use, including occasional use. Insurers test for nicotine.
- Not disclosing existing policies with other insurers.
- Understating income or overstating it to get higher cover than is justified.
- Lapsed policy because a premium was missed. Set up auto-debit.
- Wrong nominee details or an outdated nominee after marriage or divorce.
Check Section 45’s statutory contestability protection and its starting-date rules, including revival and riders. It is not simply a reward for buying early.
How to buy
- Compare on an aggregator to see the range, then buy directly from the insurer’s own website, which is usually cheapest and avoids intermediaries.
- Check the claim settlement ratio and, more usefully, the average claim settlement time, both published in IRDAI annual data.
- Choose cover until age 60 to 65, not 85. Cover beyond the years your family depends on your income mostly adds premium.
- Complete the medical test honestly. A tele-medical or waived test is not a licence to under-disclose.
- Tell your nominee the policy exists and where the documents are. A surprising number of claims are never filed because the family did not know.
Frequently asked questions
Is employer group insurance enough?
No. It typically covers one to three times salary and ends when you leave the job, often at the worst possible moment. Treat it as a bonus on top of your own policy.
Do I need term insurance if I have no dependants?
Usually not, unless you have loans a family member has guaranteed. Buying early does lock a low premium, which is a reasonable argument if you expect dependants later.
Should my spouse have separate cover?
Yes, if they earn or if their absence would create costs such as childcare. Homemakers have real economic value that is routinely ignored.
Is the payout taxable?
Death benefit proceeds are generally exempt under Section 10(10D), subject to conditions. Premiums may qualify under Section 80C under the old regime; see our comparison of old vs new tax regime.
Last updated September 2026. Premiums are indicative and depend on age, health, occupation and insurer. Policy terms and tax provisions change; read the policy document and consult a qualified adviser. General information, not insurance advice.
Sources
For the current official position, check IRDAI, IRDAI — Policyholder education portal. Fees, rates and rules change without notice, and figures in this article are illustrative unless a source is cited beside them.
Article Was Generated By AI.