Income Rep.
Human Life Value
Needs Analysis
10x Rule
Formula: Annual Income × Years − Existing Coverage
Formula: PV of future income stream = Income × [1−(1+r)^−n] / r
The 10x rule is the simplest approximation: Cover = Annual Income × 10. It's a quick starting point but the Needs Analysis method is more accurate.
Recommended Cover
₹2.00 Cr
Based on Income Replacement method
Income Replacement
₹2.00 Cr
Human Life Value
₹1.17 Cr
Needs Analysis
₹1.60 Cr
10x Rule
₹1.00 Cr
All 4 Methods — Side by Side
Estimated Monthly Premium (₹1 Cr Cover, Non-Smoker)
Age 25
~₹550/mo
Age 30
~₹650/mo
Age 35
~₹850/mo
Age 40
~₹1,200/mo
Premiums vary by insurer, health, and policy term. Get exact quotes from PolicyBazaar or your insurer directly.
Why Term Insurance (Not ULIP, Not Endowment)
Term insurance provides pure protection — if you die during the term, your family gets the full sum assured. That's it. No investment component, no savings, no returns if you survive. This simplicity is its greatest strength.
| Feature | Term Insurance | ULIP | Endowment |
|---|---|---|---|
| Purpose | Pure protection | Insurance + investment | Insurance + savings |
| ₹1Cr premium (age 30) | ~₹650/month | ₹15,000–25,000/month | ₹8,000–15,000/month |
| Returns if you survive | None (pure term) | Market-linked | 4–5% (low) |
| Investment returns | — | 12–16% charges eat returns | Very poor |
| Verdict | Best for protection | Avoid for most people | Avoid |
The right approach: Buy the cheapest term plan for maximum cover, then invest the premium difference in SIP. This "buy term and invest the rest" strategy almost always beats ULIP over 20+ years.
Riders Worth Adding
- Critical Illness Rider: Pays out a lump sum on diagnosis of cancer, heart attack, etc. Often the best rider to add — medical costs can drain savings before death.
- Accidental Death Benefit: Doubles the payout if death is accidental. Relatively cheap to add.
- Waiver of Premium: Premiums are waived if you become permanently disabled. Valuable if your income is at risk.
The Earlier You Buy, The Cheaper It Gets
Premium for ₹1 Crore cover (30-year term, non-smoker male):
- Age 25: ~₹550/month (₹6,600/year)
- Age 30: ~₹650/month (₹7,800/year)
- Age 35: ~₹850/month (₹10,200/year)
- Age 40: ~₹1,200/month (₹14,400/year)
- Age 45: ~₹2,000/month (₹24,000/year)
Buying at 25 instead of 35 saves you roughly ₹1.08 lakh per decade in premiums for the same cover.
Frequently Asked Questions
At what age should I buy term insurance?
Buy as early as possible — ideally between 25–35. Premiums are significantly lower when young and healthy. A ₹1 Cr cover at 25 costs ~₹550/mo; at 35 it's ~₹850/mo; at 45 it can be ₹2,000/mo or more. The cost of waiting is high.
Do I need medical tests for term insurance?
For cover above ₹50 lakh, most insurers require medical tests (blood, urine, ECG). These are usually free at their empanelled centres. Some insurers offer no-medical-test plans for younger age groups and smaller cover amounts.
Does smoking affect my term insurance premium?
Yes — smokers pay 50–100% higher premiums than non-smokers for the same cover. If you've quit for 12+ months, some insurers will reclassify you. Always declare your smoking status honestly — misrepresentation can result in claim rejection.
Is ₹1 Crore life cover enough?
₹1 Cr is a common starting point but may not be sufficient for everyone. If your family has large expenses, home loans, or children's education needs, ₹1 Cr may not last. Use the Needs Analysis method to calculate your actual requirement — metro city residents often need ₹2–3 Cr.
How does the term insurance claim process work?
The nominee submits: death certificate, original policy document, claim form, ID proof, and bank details. Most insurers settle claims within 30 days if all documents are in order. Always inform your family where policy documents are kept.
Should I buy a return of premium plan?
Return of Premium (TROP) plans refund premiums if you survive — but they cost 2–3x more than pure term. The extra premium invested in SIP would build far more wealth. Pure term is almost always the better financial choice; TROP is psychological comfort, not smart finance.
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