Insurance
Buy what protects your family. Skip what's sold as 'investment'. The right insurance is boring, cheap, and saves lives.
In plain language
Insurance protects you from low-probability, high-impact financial losses — death of an earner, serious illness, accident, asset destruction. It's not an investment vehicle. The two essential covers for every adult: term life insurance (if anyone depends on your income) and health insurance (for everyone, regardless of dependents).
Term life insurance pays a lump sum to your family if you die during the policy term. It's the cheapest form of life cover — ₹1 crore of cover for a healthy 30-year-old costs ₹10,000–₹15,000 per year. There's no maturity payout if you survive (which is the point — you don't want to die so your family gets money).
The insurance industry pushes endowment plans, money-back policies, and ULIPs because they generate fat commissions. These mix insufficient insurance with poor-quality investment, charging 3–8% in hidden costs. The honest path: pure term plan + health insurance + invest the difference in mutual funds. You'll be better protected and significantly wealthier.
Visualised
Illustrative for a 35-year-old with ₹20L income, ₹45L home loan, and two dependents. Most Indians are underinsured by 60-80% of recommended term cover.
Returns shown are historical and do not guarantee future performance.
Quick reference
Pros and cons
Pros
- Term life: cheap, large cover, exactly the protection your family needs
- Health insurance: protects against medical bills that can wipe out savings
- Premiums are tax-deductible under 80C (life) and 80D (health)
- Term claim payouts are tax-free
- Riders (critical illness, accident) add meaningful cover at low cost
Cons
- Endowment/money-back plans are poor investments masquerading as protection
- ULIPs combine the worst of both worlds — high charges + complex tax
- Health insurance has waiting periods (pre-existing conditions, specific ailments)
- Claim disputes happen — read exclusions carefully before buying
- Insurance agents push products that pay them most, not what's best for you
Who should consider this?
Every adult with dependents needs term life insurance until they're financially independent. Every adult and family needs health insurance regardless. Skip endowment, money-back, whole-life, and ULIPs — they're investment products dressed as insurance, and they're bad investment products.
Common mistakes
- Buying LIC endowment 'because Papa took one'. The 4–5% return locks up money for 20+ years vs 10–12% in mutual funds.
- Buying ₹50 lakh term cover when income is ₹20 lakhs/year. Rule of thumb: 10–15x annual income for term cover, more if you have young kids and big loans.
- Relying only on employer health insurance. It vanishes when you change jobs or retire. Always have a personal policy alongside.
- Skipping the medical test option to save 15 minutes. The price difference between tested and non-tested policies, and the claim dispute risk, makes the test worth doing.
- Buying a 'return of premium' term plan that returns your money if you survive. Sounds nice — but the premium is 2–3x a pure term, and the extra cost invested in MF would massively outperform the 'returned' premium.
Auris + this product
We'll calculate your real term cover need based on income, dependents, and existing liabilities, recommend buying directly from insurer websites (not agents — saves the 30% commission), and identify health insurance gaps. WealthWise's insurance gap analysis is part of every plan. We never sell insurance — there's no commission conflict.
Frequently asked
How much term life cover do I need?⌄
A reasonable formula: (10–15x annual income) + (outstanding loans) + (kids' education future cost) − (existing investments). For a 35-year-old earning ₹20L with ₹50L home loan and two kids, that's typically ₹2–3 crore. Cheaper than most people expect — under ₹25,000/year.
Term insurance till what age?⌄
Match it to the age you expect to be financially independent — typically 55 to 65. Term till 75 or 80 is rarely worth the premium hike, because by then your investments should cover your family's needs. The exception: very late starters or those with continuing dependents.
Health insurance — family floater or individual?⌄
Family floater for young families (₹15–25L cover for the whole family is cost-efficient). For older parents (60+), individual policies often work better because of how floater claims share the cover. A practical setup: floater for spouse + kids, separate ₹10–15L policies for parents.
ULIPs — are they really that bad?⌄
Post-2010 ULIPs reduced charges, but they still underperform a comparable term + MF combination by 2–4% per year after fees. The one case where ULIPs make sense: investors who would otherwise not invest at all and need the forced lock-in. For disciplined investors, term + MF wins decisively.
What riders are worth it?⌄
Critical illness rider (₹25–50L for ₹1,500–₹3,000/year extra) is excellent — pays out on diagnosis of cancer, heart attack, kidney failure. Accidental death and permanent disability rider is also worth it. Waiver of premium rider is good for sole earners. Skip 'income replacement' riders — duplicates what term cover already does.
Should I cancel my old endowment/LIC policy?⌄
Depends on years remaining. If you've paid 3+ years and are deep in, calculate the 'paid-up' option (stop new premiums, get reduced sum at maturity) vs surrender vs continue. For policies bought in last 1–2 years, often better to surrender, take the loss, and redirect premiums to term + MF. A planner can run the maths on your specific policy.
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