Term insurance is the most important financial product you'll buy—and hopefully never use. Yet it's commonly either skipped entirely or bought with the wrong cover amount.
Who Needs Term Insurance?
You NEED it if:
- You have a spouse who doesn't earn or earns less
- You have children
- You have dependent parents
- You have outstanding loans
You may NOT need it if:
- You're single with no dependents
- Your spouse earns enough
- You have sufficient assets
The Simple Approach: Income Multiplier
Cover = Annual Income × Multiplier
Example:
- Age: 30
- Annual income: ₹15,00,000
- Cover needed: ₹15,00,000 × 15 = ₹2.25 crore
Adjustments to Make
Increase if:
- You have a home loan (add outstanding)
- Children are very young
- You're the sole earner
Decrease if:
- Spouse earns well
- Significant existing savings
- Children are older
How Much Does This Cost?
For a 30-year-old, non-smoker, healthy male:
Remarkably affordable for the protection provided.
Choosing the Right Policy
Look For:
1. Claim Settlement Ratio: 95%+ CSR 2. Policy Term: Till age 60-65 3. Online Purchase: Cheaper, no agent commissionWhat About Employer Insurance?
Great as bonus, dangerous as only cover:
- Ends when you leave job
- Cover is usually low (2-5x salary)
- You can't take it with you