Term insurance before investments — yes, really
What term insurance actually is
Term insurance is the purest form of life cover: you pay a small premium every year, and if you die during the policy term, your nominee gets the full sum assured. If you outlive the term — nothing back. That's the point.
Sounds like a "bad deal"? It's not. You're not buying a return — you're buying a ₹1 crore guarantee that your family won't be financially wrecked if you're not around.
Who needs it, who doesn't
You need it if:
- Anyone (spouse, parents, kids) depends on your income
- You have outstanding loans (home, education, business)
- You're the primary or co-earner of the household
You probably don't need it if:
- You're single with no dependants and no debt
- You have enough passive income / corpus that your dependants are already covered
- You're retired and your kids are independent
How much cover?
The most common mistakes are buying too little (because premiums feel "wasted") or buying exotic products masquerading as term. The answer is boring and data-backed:
Sum assured = 15 × your current annual gross income (or more if you have big loans)
| Annual Income | Recommended Cover | Monthly premium¹ (age 30) |
|---|---|---|
| ₹6 lakh | ₹1 crore | ₹800–1,000 |
| ₹10 lakh | ₹1.5 crore | ₹1,100–1,400 |
| ₹15 lakh | ₹2 crore | ₹1,400–1,800 |
| ₹25 lakh | ₹3.75 crore | ₹2,500–3,200 |
¹ Indicative 2026 prices, non-smoker, 30-year tenure. Smokers add 50–80%.
Till what age?
Cover yourself till you'd have stopped earning anyway. For most, that's age 60 or 65. Beyond that, your corpus (hopefully) takes over the breadwinner role.
Don't buy "whole life" or "till age 85" plans — premiums balloon 4× for marginal benefit. The insurer is pricing in near-certainty of claim.
Red flags to avoid
- "Return of Premium" (ROP) plans. You pay ~60% more premium, and get it "back" if you survive. That 60% extra invested in an index fund would return 2–3× more. Skip.
- ULIPs marketed as "insurance". Mixing insurance with investments is the single most common ripoff sold by banks. Always separate the two.
- Endowment / money-back plans. IRR of 4–6%. Post-tax inflation-adjusted, you're losing money.
- Agent-sold policies. Agents earn 30% commission in Year 1. Buy online term plans directly — same insurer, 40–50% cheaper.
Critical riders to include
- Accidental Death Benefit: Doubles payout on accidental death. Cheap to add.
- Critical Illness Rider: Lump sum on diagnosis of 25–36 listed conditions. Useful supplement to your health insurance.
- Waiver of Premium on Disability: If you're permanently disabled, the insurer continues paying premiums on your behalf. Must-have.
- Terminal Illness: Part of the sum assured paid on diagnosis (not death). Usually included free.
The claim-settlement ratio trap
Everyone quotes CSR. But two insurers with 98% CSR can have very different claim experiences:
- Count-based CSR — what % of claims they settle. Can be skewed by lots of small claims.
- Amount-based CSR — what % of claim money they pay. Harder to fake.
- CSR for claims < 3 years old — where early-claim rejections hide. This matters most.
Check all three in IRDAI's Annual Handbook, not just the one the insurer advertises.
Top term insurers to evaluate (2026)
Based on CSR, amount-settled ratio, and claim-processing time. Verify current data before buying:
- HDFC Life Click 2 Protect Super — consistent 98%+ CSR, strong digital experience
- ICICI Prudential iProtect Smart — clean online process, competitive premiums
- Max Life Smart Secure Plus — high amount-settlement ratio
- LIC Tech Term — government-backed, higher premiums but maximum trust
- TATA AIA Sampoorna Raksha Supreme — strong rider ecosystem
- Bajaj Allianz Life Smart Protect Goal — flexible tenures, good for younger buyers
When to lock it in
Premiums depend on your age at purchase — and lock in for the full tenure. A 25-year-old pays roughly 60% of what a 35-year-old pays, for the next 30 years. Every year you delay costs you.
Also: waiting lets health conditions develop. A diabetic or hypertensive 35-year-old either pays a 40% loading or gets rejected outright. Buy while you're healthy.
How Moneytrak helps you manage it
Log your term policy as an Asset → Insurance → Term Life entry with sum assured, premium, due date. Set it under Recurring Payments so it never lapses. The Protect First health score won't go green until your cover is ≥ 15× annual income.