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Sahayak

Term life: who needs it, how much, and what sellers hide

One honest test first: if nobody depends on your income and you owe nothing, you may not need this yet.

Take the 1-min need test Size my cover

Do you need term insurance? The honest logic test

Ask one question: does anyone financially depend on your income — spouse, children, parents? If yes, term cover is generally worth having. If you're unmarried with no dependents and no loans in your name, term insurance is usually NOT urgent — almost no commission-driven seller will tell you that, because 'you may not need this yet' earns them nothing.

Strongest case: significant debt (like a home loan) that others would inherit. Size cover to at least the outstanding loan so dependents keep the house, not the EMI.

  • Dependents or inherited debt = yes, look at term cover.
  • No dependents + no loans = usually safe to wait; revisit at marriage, first child, or first big loan.
  • Employer term cover counts while employed — but ends with the job, same as health cover.

How much cover? The 10–15x rule of thumb

Common expert guidance: cover of roughly 10–15x your annual income, plus outstanding loans, minus existing assets — adjusted for how many years dependents need support. A ₹8 lakh earner with a ₹30 lakh home loan lands around ₹1.1–1.5 crore as a starting range. Present it as a range and a guideline, never a precise formula — try the calculator for your numbers.

Term premiums look shockingly cheap next to endowment plans for the same cover — that's normal, not a trick (see next section on what you're actually buying).

  • Start: 10–15x annual income + loans − assets you already own.
  • Recheck at every big life event: marriage, child, home loan, salary jump.
  • Nominee + e-insurance account details updated = claim paid fast; stale nominees = court delays.

Term vs endowment / money-back: 'pay and get it all back' explained

Some plans let you 'take money back' — those are endowment, money-back, or ULIP-type plans, NOT pure term insurance. Term = pure protection: low premium, large cover, and if you survive the term you get nothing back. All premium went into protection.

Endowment/money-back = insurance + savings mixed: much higher premium for the same cover, but maturity payouts (endowment) or periodic payouts (money-back) even if nothing happens to you.

The widely-discussed trade-off (general education, not personal advice): mixing insurance and investment in one product usually yields lower effective returns than buying cheap term separately and investing the premium difference elsewhere. That's why educators flag it — and why sellers pushing 'returns' over 'protection' is the classic mis-selling pattern. Some people genuinely value forced savings — that's a legitimate choice, just make it with open eyes.

  • Term = cheapest cover per rupee; nothing back if you survive.
  • Endowment/money-back = cover + savings; higher premium, money back later.
  • Ask the seller: 'what is the protection part and what is the savings part, separately?' — vague answers are your red flag.

Money-you-could-lose: surrendering an endowment plan in year 2–3 can return a fraction of premiums paid. Check surrender value before exiting any old plan.

Questions that expose a bad seller in 5 minutes

You don't need product knowledge to buy well — you need these five questions. A good adviser answers all five crisply; a mis-seller deflects.

  • What is EXCLUDED in the first 2–4 years (waiting periods, suicide clause period)?
  • What is the claim settlement ratio AND claim repudiation reason pattern of this insurer?
  • If I stop paying in year 3, exactly how much do I get back (paid-up / surrender value)?
  • Is this term, endowment, money-back, or ULIP — and what are the charges named one by one?
  • Put the promised return/benefit in writing on the benefit illustration and sign it.

Common questions

Mujhe insurance chahiye bhi ya nahi? / Do I actually need insurance right now?
Health insurance: almost certainly yes. Term life: only if someone depends on your income or would inherit your loans — unmarried, no dependents, no loans usually means not urgent. That honest 'not yet' is exactly what sellers won't tell you.
Company ka group cover hai, phir bhi policy lu? / I have employer cover — still buy my own?
Group cover ends with the job. Buy a personal policy while you're young and healthy — waiting until after a diagnosis means exclusions, loading, or rejection. Size it as a top-up over the employer cover.
Kitne ka cover lu? / How much sum insured / cover do I need?
Health: ₹5–10 lakh starting range (₹10L+ in metros). Term life: 10–15x annual income + loans − assets. Both are ranges, not precise formulas — use the calculators on this site for your numbers.
Floater lu ya alag-alag policy? / Family floater or individual policies?
Floater = one shared pool for the whole family (cheaper, but one big claim can empty it for everyone that year). Individual = each person gets the full cover (costlier, no sharing risk). Senior parents usually deserve a separate plan.
Term plan lu ya money-back/endowment? / Term or money-back plan?
Term = cheapest protection per rupee, nothing back if you survive. Endowment/money-back = protection + savings mixed, much costlier premium, money back later — but effective returns are usually lower than term-plus-separate-investment. Ask the seller to split the two parts in writing.

See all 32 questions with search →

Official links (verify everything here)

IRDAI — insurance regulator Bima Bharosa — complaint portal IRDAI policyholder education Insurance Ombudsman scheme (IRDAI) Ayushman eligibility check (NHA) PMFBY crop insurance portal

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