Suman Kumari
Reviewed by Suman Kumari
Last updated 17 Jun 2026
What term insurance is for
Term insurance is the simplest, cheapest form of life cover. If you pass away during the policy term, your family receives the sum assured. If you outlive it, there is no payout — and that is the point: you are buying protection, not returns.
A simple rule for cover
A widely used starting point is 10–15× your annual income, adjusted for:
- Outstanding loans (home, car, personal) that your family would inherit.
- Years until your dependents are financially independent.
- Existing savings and investments.
So someone earning ₹12 lakh a year with a ₹40 lakh home loan might target ₹1.5–2 crore of cover.
Why bundled policies fall short
Endowment and ULIP policies mix insurance with investment, which usually means expensive premiums and inadequate cover. A pure term plan gives far more protection per rupee. Invest the difference separately via SIPs.
When to buy
Buy young and healthy — premiums are locked in low and rise with age. Disclose medical history honestly so claims are not rejected later.
The right cover is the amount that keeps your family's life unchanged if your income disappears.
Use the Term Cover Calculator to estimate your number, then review it with a registered advisor.
Sources & disclaimer
Information here is educational and draws on guidance from SEBI, AMFI, RBI and IRDAI. It is not personalised investment advice. Mutual fund investments are subject to market risks; read all scheme-related documents carefully.
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