Term life insurance

What is it

Term insurance is like renting cover: you pay a premium every year, and if you pass away during the term, your family gets the full sum assured. If you don't, you get nothing back — there's no maturity payout. That's exactly why it's the cheapest way to get a large cover: a healthy 30-year-old can get ₹1 crore of cover for around ₹700-1,000 a month.

Term insurance penetration in India has historically lagged countries like the US and UK, partly because agents earn far higher commissions selling ULIPs or endowment plans than pure term covers. Online term plans, first popularised around 2010, cut costs by removing distributor commissions, making large covers far more affordable.

Who it's best for

Anyone with dependents — a spouse, children, or parents who rely on your income.

Who should avoid it

You have no dependents and no debt that would burden anyone after you.

Pros

• Highest cover per rupee of premium of any insurance product
• Simple, transparent — no investment component to track
• Tax-free payout to your family under Section 10(10D)

Cons

• Zero return if you outlive the policy — by design
• Premiums rise sharply if you buy later in life or have health conditions
• Riders (critical illness, accidental death) add cost and complexity if over-bought

Key ratios to check