Why people don’t buy Term Insurance?- Analysis of a case study on Indian people’s mindset

POSTED BY Jagoinvestor ON August 3, 2009 COMMENTS (260)

“We have no desire to make anybody look like a blithering idiot, but we do love it when they do. “– Stephen Colbert. One of the reasons why most people do not take Term Insurance is because “They don’t get anything back at the end”.

In this article, I will show you why this is a psychological issue. Even if you get your money back at the end of the tenure it won’t make much difference. In this article I will prove that the argument “Term Insurance is waste of money because you don’t get anything back” is amazingly idiotic.

term insurance

What is the main Issue with People not liking Term Insurance

Why people don’t like Term Insurance is the question. The answer is simple: because you don’t get anything if you survive the whole tenure and hence the amount paid as premium is wasted – this is claimed by millions. Fair enough!

The first thing is, these people do not understand or appreciate the Importance of Life Insurance. Now let’s see this situation from a different angle. Assume you get the money at the end in your Term Insurance.

Let’s see a case study of a general Family. How does a family look like:

Manish is 28 yrs old and got recently married (oops!!). He earns close to 40,000 per month. His monthly expenses are around Rs.25,000 overall and he saves 15,000 per month (hehe). He also has his parents as financially dependent on him.

He is 30 yrs away from his retirement. He calculated his Insurance Requirement and it was close to 50-60 lacs minimum. Let’s take it as 50 lacs for simplicity for now. (Get more of Insurance Articles from Archives section.)

Analysis of Case Study

Now is the fun part: his current monthly Expenses are close to 25k. Now what will it be when he retires after 30 yrs?

So the average inflation for last 30 yrs was 6.5% (based on past data). Let’s assume it will be 6.5% for next 30 yrs on an average. Then the monthly expenses after 30 yrs would be 25,000 X (1.065)^30 = 1,65,359 (1.65 lacs). If he takes a Term Insurance at the start, his yearly premium per year for 50 lacs cover would be Rs.11802 for 30 yrs tenure from Aegon Religare.

Do you know how you can do your Retirement Planning in 6 steps ?

Click on image to Enlarge

Which means, he is going to pay total premium of 3.54 lacs in his entire life. How even if he gets this money back at the end, how much will it benefit him? How many months can he survive on this money? 2 months is the answer!!

With expenses of 1.65 lacs per month, the money he gets back from term insurance is enough for not more than 2 months. Let’s take maximum 3 months. That’s it!!! Are you confused with Calculations, See this Video presentation by me where I explain how to do important Calculations in Personal Finance.

So Following are the questions needed to be asked

  • Do you want to put your Family at Financial Risk because you are not getting 2 months’ worth of expenses back?
  • For a small amount you “don’t get” at the end are you not being childish to Secure your family?
  • Don’t you think you are seeing Term Insurance from a wrong attitude?
  • Are you not concentrating on “what you are not getting” rather than “what you are getting”?

We already have “Return of Premium Term Policies”, but they are themselves idiotic because they are again designed to just exploit the weakness of people who feel that term insurance is waste of money because they don’t get their money back.

Read this to understand why Plain Term Insurance is better than “Return of Premium Term Insurance policy”.

Watch this video to learn why Term insurance is better than regular insurance policies:

Reason why Indians don’t like Term Insurance’

Reason 1#: Most of the people concentrate on number and explicit data, like the money they are not getting back or it’s a waste of premium if nothing happens to them. They fail to look internal advantage which term Insurance provides.

Reason 2#: We are emotional with Money, we are more concentrated with Growing money and getting money back rather than what value it provides in our life.

Reason 3#: Most of the people think that the probability of dying is much lower than an average person which is again totally idiotic. We just don’t want to visualize a bad situation and hence do not concentrate on that situation.


In life we don’t appreciate things like Health, small moments of happiness, nature, time spent with our loved ones which are most wonderful and real things in life. Term Insurance is one of the similar things in personal finance domain.

You just need to shift your focus of view from “what you are losing” to “what you are getting” once you do this with Term Insurance and your Life, both will become wonderful.

Please comment on what do you think about this and do you agree with it. Are you victim of such mindset?

260 replies on this article “Why people don’t buy Term Insurance?- Analysis of a case study on Indian people’s mindset”

  1. JayPatel says:

    Hi Manish,
    I am 25 years old single and earning 35000 per month. As of now my parents are not dependent of me.
    As of now I don’t have life cover except my employer provided which cover is around 40 lacs.
    Which insurance i should opt in? Money back term plan i think as an option.

    1. Hi Jaypatel

      I suggest you leave your details at http://jagoinvestor.dev.diginnovators.site/services/life-insurance . we will guide you on that

  2. KIran says:

    hi Manish,

    I have left job recently in Dec 2015 & my wife is home maker. we get some rental income & interest on FD in cash, so no income proof in written, HDFC said they cannot open Term insurance for my wife as she has no income, is there any other company which offers term insu for house wife, please advise.

    1. No , one cant get it if there is no income proof !

  3. SaurabhNandgaonkar says:

    Hi Manish,

    I just need to know how company affords to pay this huge sum in case of death of the insured?
    These all are private corporations and not some charitable institutions.
    Also, I would like to know if in the history of insurance has any nominee been lucky so far in getting this amount?
    It’s a hard earned money and without knowledge if term plan really pays off why would anybody, including Indians, pay for this?

    1. Hi Saurabh

      Its the law of large numbers. When 1000 people pay term plan each year, around 1-2 claims arise. So the premiums collected from all is paid to just 1-2 at the end of the day. THis is how insurance works .

      Read this for details – http://jagoinvestor.dev.diginnovators.site/2013/05/how-insurance-companies-work-and-the-business-model-behind.html


  4. Ayushi says:

    Can I change/add nominees later as my dependents change?

  5. pune says:

    Dear Manish,

    I recently came across your blogs and find many things truly interesting. I started really knowing too new concepts like Term Insurance. I would really care for my family. Please suggest on today’s date which is the best TERM INSURANCE we could invest in with a possible lesser premium yearly. Looking at today’s inflation, I feel we family should be covered atleast between 50lacs-2cr after my absence. Please suggest best ones/one.

    Thank you so much,

    1. I think you can take any term plan, just make sure you are honest about all the info . thats the main thing

  6. vignesh says:

    Hi Manish

    Actually i got a term two years before and now am 25. if i check the new policy for my age with the same insurer and same tenure it comes 1k diff.

    can i stop the old one and take a new one?

    Pls guide me

    1. Hmm.. Its your call . I would have not changed it for 1k amount . The whole process is not worth that saving in my opinion !

  7. Arpan says:

    Hi Manish,

    I have a doubt regarding premium across the tenure.

    Let say, I buy a term insurance of 1 Cr at the age of 25 for a cover of 30 years, for which premium come nearly around 8.5k approximately. Will this premium be increasing as and when the the age of policy buyer increases ?


    1. NO , it will be constant for all years only you have bought the term plan

  8. Dipesh says:

    Hi Manish,

    I am 23 years old, and I am planning to get Term Plan.
    I am seeing 8400 rs. yearly premium for 70 lacs death coverage from Aegon Religar, even I am a smoker. Please suggest, can I go ahead with this or should I look for others?
    Awaiting for your response!
    Thank you!

    1. Yes, you can go for it ..

  9. kartikyn says:

    Hi Manish, Dhawal and all other experts,

    need some advice please

    I am an NRI male 34 years, non-smoker and non drinker. BMI less than 25. Only problem is my HDL cholesterol never crosses 28 (overall chol is less than 170, LDL < 110 and i have no triglycerides issues either). No sugar problem too.

    I have no debts and some reasonable savings in MFs, Equity, PPF and NRE FD deposits besides bullion.

    Three Questions, (insurance limit of 3 crores arrived at after taking future inflation and needs into account)

    1. I have appeared for medicals for 2 crore Amulya Jeevan II. TMT, echo etc are ok. The premium is nearly 64000 pa (no loading as of now). While the application is nearly made, (still can stop it),
    I wonder why LIC is 2.8x costlier than an ICICI iprotect at 22,875 for a similar policy. I understand the use of older mortality tables by LIC and also understand there is no big difference in payment claims b/w players.

    Need advice if it is worth the pain to go to specifically Kotak, Aviva or HDFC or ICICI for alternative as it seems savings in excess of 30000 an year can be invested in an equity MF for much better returns (roughly 5-6% real returns post inflation adjusted)

    2. I am also in the process of taking an permanent disability/accident death rider from future generali for 1 crore and premiums are around 16000 pa. Rates seems similar across other firms and my agent was quite honest. Do I need to do additional homework here?

    3. I have a bunch of Jeevan Rekha and 3 other money back/endowment policies that my agent in Mumbai deceived me into buying when i was 24. I have paid premiums for 10 years now but think it goes against my idea of mixing investments and insurance… Am i better off surrendering them as I have to pay premia till 2034 and they are not cheap (22,000 premium for 8 lac cover in total plus some money back and bonus later)

    Should I surrender these policies and invest that 22,000 instead in an equity MF or in equities. Would appreciate some advice.

    Many Thanks

    1. 1. Better take a pvt life insurance, its the same thing truely speaking . Dont get over obsessed with LIC on this and waste the extra 30k

      2. I think you can just go ahead in that

      3. SUrrender them now ~


    2. Krushna says:


      Its all the mind game private sectors play with customers by offering less premium. If you see the mortality ration . LIC offers affordable premium. so they can pay all the claims within the premium amount they collect from others.
      that’s why private sectors has maximum rejection ration in such cases.

  10. Chetan says:

    I am 39 years old. What is the ideal tenure for online term plan.? If it is LIC online plan. should it be different if it is from HDFC ..?

    regrds /ck

    1. Its not different from LIC . You can go for it for 30 yrs

  11. Vivek says:

    Hi Manish,

    First, I would like to thank you for writing so many informative articles that provide insight into Financial world to people like me and so many others like me.

    Now coming to the point, in this article, you haven’t considered the interest, in your calcutaion of 3.54L, a person will get when he/she does the RD of the premium which is as per your example 11,802 for 30 years. If the person does the recurring deposit for 11,802/- every year till 30 years, he/she will get 13.36L (considering 8% interest rate).

    And you can consider 3.54L to be negligible when compared to 50L, but we can’t ignore Rs. 13.36L.

    I am not questioning the benefits of term insurance, but with the new figures of 13.36L definitely I have now become equally inclined to both “term insurance” and “Insurance with high premium but with returns”. And couldn’t decide which one should I go for.

    Please help me decide which is a good option.

    Best Wishes,

    1. Will check that and get back Vivek !~

  12. Ramu says:

    Hi Manish,

    I am 25 years old and would probably get married next year. I’d like to know about the Term insurance. I can pay a premium of 10k per annum and would like to know clearly if i have to pay the premium for about 10 years and the maturity period is 30 years. My questions are…
    1.After the maturity period if I am still alive, will I get any money??? when I will get money if I am alive??
    2.If i died after the maturity period, what my dependents will get?
    3.If I died before the maturity period,, what my dependents will get???
    4.Do this Term insurance covers death due to health problems, accidents???

    Please do reply me


    1. Hi Ramu

      I think you need to be on call with someone related to insurance .. I will connect you to one guy I know

  13. Rahul says:

    Dear manish, good day…have a query for long but unable to find a satisfactory answer..want to have a term insurance plan…LIC having the highest % of claim settlement and with a contact/agent to talk to my parents in case of death unlike other online plans…
    the problem is i am in merchant navy…i dont pay tax as i earn in dollars and enjoy benefits of NRI…are these term plans allowed for NRIs or not…insurance companies esp religare mailed that yes they do for merchant navy but i still doubt it that claim settlement may be an issue then and can be denied on the grounds of me being NRI…
    havent got satisfactory answer yet from anywhere…what shall i do…

    1. No there wont be any issue . After you declare that you are NRI, that is already factored in the premium, and your claim will be paid .

      1. Rahul says:

        Thank you Manish, neways i spend around 3-4 months in a year at my hometown in India and this is where ambiguity comes as spending 3-4 months in India has created confusions in most of the insurance advisers/customer care executives.
        Thanks again.

  14. Umesh Patel says:

    Great Job Dude.
    Thanks a lot.

  15. Umesh Patel says:

    Great Jo Dude.
    Thanks a lot.

  16. Gayathri Iyer says:

    Hi Manish… Have been following jagoinvestor big time..
    In the last few months, have closed 3 money back policies, 1 jeevan saral policy and 2 endowment policies held by me / my husband.. thanks to the learnings from this site…!

    We have also gone for a term insurance with LIC last year… The problem now I face is – for a life cover of 45lacs, the annual premium comes to around 18K.. which seems to be way too high, considering the recent rush in online term plans which give a the similar cover for very low prices… (even a company as good as hdfc gives 1 cr cover for around 13K)… Sadly, I missed your articles on cheap online term plans / the drop in premium for over 50L coverage.. 🙁

    My query is – would it be wise to close term policy with LIC (only the 1 premium is paid do far).. and go with other cheaper options..?

    If yes, are there any specific disclosures about this closed LIC term policy to be made before buying the new term policy…?

    1. Yes , better go with private insurers .

      You can close the LIC term plan , but when you apply for private , they will ask you if you have any other term plan running, and there you need to mention about LIC term plan , but do not get scared, mentioning it would not change anything .

      1. Gayathri Iyer says:


  17. Mahesh says:

    Hello Manish,

    There are certain Money back policies which also return money periodically (for e.g. every 5 years). So even in this case is the above calculations valid?

    Best regards,

    1. Yes, even in those cases .. % might be a little up and down , but the concept remains the same. I suggest you find out the IRR of those policies using this way – http://jagoinvestor.dev.diginnovators.site/2011/02/calculate-insurance-policies-returns-video.html

  18. Gayathri Jagdish says:


    I have a 1 year old daughter I am planning to buy a insurance policy for her….
    would u plz suggest me some good plans… waiting for ur reply…Thanks in advance

  19. Pratik says:

    Hi Manish,
    There are certain exclusions in term insurance like if a person has committed suicide than his claim will be rejected. But what about murder? If a person is murdered than will his family get the claim money or will it be rejected?

    1. Even suicide is covered after an year . Murder is always covered, unless its planned by the person dying itself 🙂 . It happened once in a case and the claim was rejected .

      1. Pratik says:

        Thanx Manish for solving the query.
        Just out of curiosity: in the above case ‘how did the insurance company came to know that the murder was planned by the person dying itself ? Do they rely on police investigation or do they have their own investigators who carry out the process ?

        1. They have their own investigation also and as there was murder, so they will rely on policy also

  20. Pratik says:

    After reading the article & comments i explained the benefits of term insurance to my colleagues…but they simply wont listen….That’s why i realized why you mentioned that this is “psychological issue”!!Amazing analysis
    atleast i got wiser 🙂

    1. Pratik

      let me suggest you something. Gift them my book which is at flipkart , bear the cost yourself for atleast 1-2 people you care about , and tell them, if after reading the book, you feel it helped you and it was worth , return back my money , else consider it as a gift. I should 99% work in your favour 🙂

      1. Pratik says:

        haha…nice1!definitely will…but first i myself am dying to read the book…have heard lot of positive reviews for your book…so its on the top of my ‘books to read list’..

        1. Great .. just order it and read it

  21. suresh says:

    Hi Manish,
    I have a few Questions and it would be great if someone can think about these scenerios as well.

    Consider that I have a Term Insurance of Rs.7000 per year and the Sum Assured is 50lacks.
    Now, First Year I pay Rs.7000; Second Year Rs.7000 and so on for 10 years. So Total Amount I paid would be is Rs.70,000. I have no luck to die and still my Sum Assured is 50lacks.
    I am sure after 10 years, things gets change and new policies come which can be cheaper say Rs.7000 and the Sum Assured is 1 crore.
    So, I will cancel my Old Plan(Rs.70,000 is gone) and change to my new Plan(Rs.7000 with Sum Assured for 1 crore).

    My Question or what I am trying to ask is
    1. I would like to know or someone can predict if term insurance will get cheaper or costlier in the coming years. – If it gets cheaper then people will be cancelling their old plans! 🙂

    2. Another Idea is considering Term Insurance as Yearly Scheme. Then I pay Rs.7000 and my Life Cover is 50lac. If I escape the year; then I lose Rs.7000. Likewise, each year as my requirement changes I can change my plans.

    With Term Insurance I think we can cancel(or even abscond without paying) any time(Since we are anyway losing our money) and buy a new policy which is better at that point of time.
    Correct me if I am wrong and if its better we chose a Term Insurance which increase 5% per after 5 years like that to avoid these confusions?

    Sorry for my Long Post. This would be great if someone can understand what I am trying to say.


    1. Anand Doctor says:

      Dear Suresh,
      While doing some research on Insurance, I stumbled upon your query. Hopefully, you would have already got your answer by now (it’s now 5 months) but in case you haven’t, please consider the following:

      Future Rates:
      Most Indian Insurance companies are relying on old LIC data to estimate risk of mortality and fix their premiums accordingly. As this data gets updated and refined, they will be able to differentiate and offer cheaper term cover rates to low risk customers.
      However, as your age increases, the cost of insurance will creep up.
      So it will depend on your age, profile, geographical location as well as the quality of data and competition among the insurance companies. If you get a better deal from an insurer with a good claim settlement ratio, take it.
      However, make sure there is no time lag between the 2, leaving you exposed to risk.

      Additional requirements:
      You also have the option to buy additional policies for shorter duration as and when the need arises. viz. while you have incurred a liability like student/car/home/personal loan or business liability. Once the liability is paid off, you can discontinue the the additional policy and save the premium cost.

      Of course, insurance planning, like all financial planning is a dynamic exercise and you must review your requirements at least once in every 2 years or when there is a major change in your situation.

      Hope this helps.

  22. Rajendran says:

    You have completely changed my views that i had on Insurance. Thanks for opening the eyes. I have no luck with insurances as i was forced to choose the polices by cunning advisers because i had no idea about insurance or finance planning.
    In 2006 I bought RIM Endowment and dropped it without paying premiums after 1.3 yrs ( lost around 22 K). After that i was brainwashed by a friend come adviser to buy Max New York – Whole Life Participation Policy for 10 L sum assured with all riders. By that time i was forced to choose some policy for tax planning purpose since i had no idea about tax planning too. Now i have completed 3 yrs and the policy is in live state (next due : nov 2012) but after reading your blogs i feel ashamed to have a policy like Whole Life (21K P/A premium) participation which will never either be helpful for me. I have a small plan running around my mind but this time i don’t want to take decision with out asking an expert.

    Now I plan to drop my existing MaxNewYork Whole life Plan ( till now i have paid around 64K, i guess i will at least get 37200 (60% of premium paid) back after closing it. And i have decided to go with 2 Term insurance polices for 25 L + 25 L ( one can be dropped after my retirement or some time later) which will not cost more than 8 K P/A. The remaining 14K + additional amount can be invested in Long term mutual funds. Personally i have 2 medical insurances so i don’t bother about it now.

    Please correct me if am wrong.

    1. Yea whatever you plan seems to be a much better option that your last plan 🙂 . Just go ahead and try to learn more about all this in coming times .

      One more thing . Stop saying that you were forced to buy things . No one can do it , you didnt question things and took the decision, you need to take the responsibility .

      1. Rajendran says:

        Apparently I agree with you, i took wrong decisions without analyzing products by asking more questions.
        Thank you very much for your comments on my doubt. Based on your comments, I spoke with 2 insurance companies reg term plan and as a result i have decided to buy AEGON REligare with all riders + 30 yrs = 25 L and AVIVA for 25 L + accident rider for 25 L. I guess will safeguard my family incase of my absence. Hereafter, i have to think carefully and follow the experts suggestions to make returns out of my investment either in mutual funds or from insurance.

        Thanks once again for bringing the light in to my life.

        1. Good to hear about your decision to take the term plan !

  23. deepali says:

    Hi manish,

    Hope u r doing good…!!!

    im working and have 1 plan of reliance(money back) from last 3 yrs. Now planing to take 1 more plan from investment point of view.

    my hubby n me , both are working and planning to save at least 2 lac per year for our future.

    Is saving in post office relevant…!!

    Can you tell me which plan suits us.??


    1. DOnt look for “policies” and “Plans” . Just go for FD’s or mutual funds

      1. deepali says:

        thnks for ur prompt rply..

        how Rd(post office, return 8.5%) works….
        or NSC form post office(return 8.6%)..

        i dont hav any idea abt mutual funds,,plz explain

        1. Deepali

          I suggest you take help from our forum for all your queries – http://jagoinvestor.dev.diginnovators.site/forum

  24. Vinod says:

    Hi Manish,
    i zeroed the term plan for 50 lacs with Accidental rider with disability.
    i inquired with HDFC, kotak but they don’t have Term plan with disability riders.
    your suggestion please.
    if i go 25lac term and other 25 lac term plan with accidental Disability rider.will this benefit?


    1. Yea that is fine .. the problem is that online term plans mostly dont have any kind of riders , better go for offline one;s if you need it

      1. Vinod says:

        but they don’t have with Offline too like HDFC Kotak,
        now i need to search for another cos.
        what will you suggest ? any companies which will be better ?


        1. Which one doesnt have an offline one ?

  25. Vinod says:

    Thanks Manish,

    how will i go with options available,
    there are online and offline plans,
    is there any difference with it?
    will be any hassles to claim online plans?
    should i go with riders will that benefit?

    1. No difference between them other than mode . Riders are upto you

  26. Vinod says:

    Hi Manish,
    i”m 36 yrs married ,looking to insure policy myself which will protect my family .
    i have searched lot of articles and blogs but even i can not zeroed out any plan or cos.
    simply 50 lacs cover.what would you suggest?term plan or endowment or else?


    1. Take a term plan of 50 lacs or 55 lacs from any company which you have trust on . I would say Kotak / HDFC / AVIVA

  27. Aditya says:

    pls provide the comparision b/w term plan and whole life plan. to my understanding both are pure insurance plans wherein premium is not returned. so it makes sense to take a whole life plan and enjoy life time coverage than going for a term plan for 20/30 yrs. pls correct me if I am wrong.
    do companies provide whole life policies online just like term policies?

  28. Dr Amit says:

    Hey Manish
    Im 28 years, single and occasional smoker male, working for central govt. as surgeon , my monthly income is around 48k , and monthly expenses is around 15000+ car loan emi 16000 for 5 years (loan amount Rs7130000) + personal loan emi 2800 (loan amount Rs 85000) and no any definite saving except lic’s jeevan saral with 60000 annual premium + NPS saving around 150000+ planning for a ppf account and thinking about a term insurance with large some like Rs10000000, kindly do analysis my case and guide me and tell me about any cheap and best plan with maximum rider options.

    SBI Smart shield with level up option is in my mind what is your opinion about it ?should i quit jeevan saral or should i continue it with term plan?
    Dr. Amit

    1. Dr Amit

      There is nothing like occasional smoker in Life Insurance .. you are smoker only as per company . For detailed analysis you should go for financial planning .. this thread is to take specific questions .


  29. bhavana says:

    Actually it was started with jeevan saral, but gone some where ie ulip and other ins companies.First what do u say JEEVAN SARAL IS GOOD OR NOT

    1. Bhavana

      No , it would not be able to give you very good returns in long run


      1. bhavana says:

        long term means can u plz explain

  30. rupa patnaik says:

    Manish Sir,
    i am extremely thankful to you for your valuable advise on financial planning. I want your expert on my personal financial plan. I get a salary of 21k after pf deduction. i hav done a r/d of 5000 monthly for 1 yr, sbi gold etf of 3000 monthly for 5 yrs,sip of 1000 for 5 yrs of hdfc top 200. i hav not started with any tax waiver plans. i hav opened a ppf account.i hav a ulip with hdfc which i hav stopped paying after the lock in period of 3 yrs of 10k annually. should i surrender it? could u plz advise also if i should go for jeevan surabhi policy of lic. plz suggest a term insurance plan of 25 yrs for 50 lakhs. i am 26 yrs now. do suggest me any other good policies. i hav no financial dependents. but i want to go for higher education after 4 yrs.
    thanking you in advance

    1. Rupa

      I would suggest asking these question on our forum where oyu can get detailed advice : jagoinvestor.com/forum

  31. Lokesh says:

    I wish term plans should’ve been this popular 3-4 yrs back. At that time I invested hugely in insurance specially Endowmnet plans and ULIPs. Now I am realising that it was a real costly decision. On Endowment I’m going to earn a merely 3-4% pa and not sure whether it’ll be tax free. I’m in loss in ULIPs because of huge charges incurred on them. Even if I get a good return on ULIPs which are equity driven, they’ll cover the loss first then only it’ll start showing any profit if any. Also, a part of this profit will be eaten up silently by insurer company. God knows whether PPF or FD could have been a better option along with term plan.

    1. Lokesh

      Yes , a term plan with FD is way superier than plain endowment plans atleast .. So if you dont understand equity , better go with FD + Term .. What is the next step in your financial life now


  32. ClickInsurance.co.in says:

    ULIPs are indeed a good investment vehicle from tax savings perspective as well. But the purpose should not be confused with that of Term insurance. Although ULIPs provide life cover to the insured, term insurance is very critical from the amount for which the person is covered. For the same sum assured, ULIPs can be quite expensive. Moreover, they are dependent on Market risks, so it is critical to assess one’s risk appetite before buying ULIPs.

    1. Thanks for your comment

  33. Sam says:

    Thanks a lot for being a Light House in the ocean of Insurance Policies and MFs. You cover PPF, POMIS etc and not miss anything in Protection & wealth creation. Great Work..!!!

    Thanks for the smart solutions for the hard earned money.

  34. Raj @ WordPress Tips & Tricks says:

    So what should be the factors that one should consider before opting for term insurance..??

    1. Raj

      Term insurance is a simple product, there are not much things to look at , its like , do you want it or not , if yes ,then just buy it , if not, then dont ..

      You just need to decide wich company you want and which mode (offline or online) and if you need any riders ?


  35. suresh says:


    Follow on question to Excel Matic.

    I think the point is not just return of the premium paid but the value of that annual investment over a period of 30 years. If you consider 11, 800 investment in balanced (less risky and not aggressive)per year for a span of 30 years with 11% return that amounts to close to 23L which is not just 2-3 months but close to 16 months of expenses.

    Other than this minor technical correction i think one should go for term plan for my understanding/reasons.

    – Why not invest in a mutual fund or some balanced investment scheme and have this fund available with you. Please note that you have access to portion of your money of this <=23L (depending time we are talking about) during entire life for any urgent needs. Not good idea!! what about the case of adversity and think of your dependents, there is no prorection. Have a good health protection plan also.

    – With regard to above example how does the 24L or 50L at the end of 30years makes any difference?. As someone highlighted earlier after 10 years of tenure the value SA dilutes and either 5% increase OR 50% increase for 5 years is seems logically good way to to go. OR ensure that in your term plan you got that option to top up later point of time.

    – Personally i vote for term plan + mutual funds which has the combination of both protection and weath creation.

    Do you agree?


    1. Suresh

      Definatlely .. I agree with you point .


  36. almon says:

    I am currently 23 yrs old and dont have any dependents. So, it doesnt make any sense to take term insurance at this time. However, I am thinking that I should take term insurance for 5 yrs and again continue that policy for another 30 yrs or so. But I have doubt that whether I have to get my medical checkup again. If thats true then It doesnt make sense to take term insurance. Guide me.

    1. Almon

      Yes you will have to give medical test again , there is nothing like “extending” a term plan

  37. Deepak says:

    Nice work manish keep it up

  38. Deepak says:

    Nice article impressed
    @manish my age is 25 i am unmarried my monthly income is 30000/month my parents are dependent on me. I am thinking to online buy a term insurance plan. From a few discussions above wt i hv understood that we should opt for 2 companies rather than one only. Can u suggest me best companies considering parameters max. coverage factors, High claim settlement ratio and Min. premium

  39. ABMJ says:

    Hi Manish,
    Thanks for all the great articles. Really cleared a lot of my doubts.
    I am a 25 year old single guy with no dependents. I strongly believe in keeping my insurance and my investments plans separate. I am currently employed at a company wherein I have a group life insurance cover of 15lakhs. I was looking at a term insurance policy for 1cr (30year term) for which the annual premiums were coming to about Rs 10,000. Would you suggest I go for this insurance now(given that I have no dependents) or should I rather wait a few years to get married first before considering it (at the risk of higher annual premiums)?
    Any advice in this regard will be greatly appreciated.
    Keep up the good work.

    1. ABMJ

      You should wait and take the term plan later , dont just look at high premium later, also see the premiums which you will save in next some years


  40. Sathish says:

    Nice article mate! I like your site very much. Keep posting !!!

    1. Sathish

      Thanks , Keep reading and ask your questions .


  41. Rafeshak says:


    1. I was thinking of purchasing a online Term Insurance Plan, because of some online blog’s stating that “Purchasing Online could be Risking one with respect to the Term & Conditions”. I have decided to not purchasing online.

    2. Thought of purchasing “Aegon Religare iTerm Plan”, but as it is not covering the any riders like Accidental – Partial Disability Benefits, please suggest any other.

    1. Rafeshak

      1) Not sure what do you mean by that , there is no risk like what you have mentioned

      2) Yes , they dont provide any riders , you can choose kotak online plan


  42. Vasanth says:

    Hi Manish,

    I have been going through the articles on your blogs for the last couple days. They are very informative . you are doing fantastic job in spreading the awareness on personal finance.

    I just had one query. Is it possible for a diabetic (Type 2) to obtain term insurance? Is there any life insurance company in India, which provides this facility? Also what is the extra premium (approx %) charged compared to the normal healthy person.


    1. Vasanth

      Yes you can take term insurance , just that for you the premium would be higher than normal , may be 50% or 60%


      1. Vasanth says:

        Thanks Manish.

  43. Amit Gulati says:

    Thanks for your response Manish

    I have additional coverage also totalling to Rs.28.00 Lacs

    Rs.20.00 Lacs from LIC Anmol Jeevan
    Rs.3.00 Lacs from ICICI Pru Smartkit (ULIP)
    Rs.5.00 Lacs from TATA AIG Invest Assure

    My current monthly household expense is Rs.35000/- (Including Car Loan EMI), my wife is a housewife and I have a son aged 4 years. I hope I am adequately insured with a total cover of Rs.48.00 Lacs. Please let me know your thoughts on this.


  44. Amit Gulati says:

    There is no doubt that term insurance is the cheapest form of insurance and in the world of personal finance this is the most basic most primary and in fact best financial product one should go for.

    I have bought one term insurance from ICICI Pru for an annual premium of Rs.5587/- for a SA of Rs.20 Lacs. Now the same cover is available online with a much lower premium with same terms and conditions. Premium for this policy is due next month and I am in a fix. Should I terminate old policy and buy a new one online.

    1. Amit

      Yes , you should replace your old policy with new one , You are probably paying the premium as per the old rates , but recently in last 1 yrs the charges have been slashed a lot . Is 20 lacs enough for your dependents ?


  45. Sunil says:

    The discussion on the term is very informative here.. thanks to all.
    In my case, I have planned everything for my family like
    bought 2 plots for my 2 kid – for future education purpose
    planning to retire early by age 40 itself ( 35 now ) with 40L in hand which to be invested in POMIS with monthly income as 30k for rest of years leading a simple life as a private college lecturer in my home town( not a city )

    So the question is do I need term insurance now though I have set a permanent income to my family. Please suggest on this..

    1. Sunil Date says:

      1 Plots may not be an appropriate investment for children’s education for which a certain amount will be required at a fixed time. Plots cannot be easily liquidated.
      2 Max amount allowable in POMIS is 4.5L per person and 9L jointly. Moreover there is no guarantee that the scheme will continue when your first investment matures and even of it does, whether the 8% rate will prevail. Please note that the government is not keen to manage the funds of the public and would rather leave it to the banks and other financial institutions.
      3 Have you considered the fact that inflation needs to be factored in to the monthly household requirement and you can expect atleast a 40 year period, post your current retirement and may be more for your spouse who may be younger to you
      4 Have you considered future exingencies like interest rate moving downwards like in developed countries, volatility of market returns, medical emergencies, disability due to accidents, and any other emergencies and provided for it ?

      1. Sunil

        I agree with you , but considering that plot would be illiquid , one can take selling decision before 2-3 yrs and find the right buyer . What do you say on that ?


        1. Sunil Date says:

          @ Manish

          Agreed that plot selling can be planned 2 to 3 years before. But over a long period, how much return can one expect. Only if rental income is available can property yeilds be considered in the 15% range pre tax. More over the developments in the area around the plot over the long period will influence the sale price considerably. Like HIG/MIG/LIG/slums, type of gentry/community around. Roads / water availability / infrastructure / amenities around.
          This is not a NO-NO as an investment ; I am saying that it is not appropriate for the goal mentioned.

          1. Sunil

            Yea agreed that its not the best thing one can do


  46. NIRANJAN says:

    Hi Manish,

    I just started reading your articles on the website & I do like your posts. These are very informative & helpful for everyone. I started investing in mutual funds SIP by reading your posts. (I found you as a financial adviser for free) 🙂

    I have covered myself with some amount of Term insurance. Now if I want to increase the life cover in the same policy, is it possible or do I need to go for new policy?

    I have HDFC term insurance plan. If I need to choose another one, which will be the good one??

    Thank you.

    1. Niranjan

      you cant increase the cover in all the plans , only 1-2 plans offer it to some limited percentage , but i dont think HDFC is one of them , you can go for a new policy now , just make sure you go with a new insurer . try online plans , read my new article coming up on this topic in 2-3 days


  47. Saurav Sinha says:

    Hi Manish & fellow JIians …. I heard that IRDA has issued 1 letter/info which says that in a ULIP, the basic sum ensured should be equal to the enhanced sum ensured. Is it tru? Where can I find it?
    As I am going for BSLI Dream Endowment plan, this development will affect my planning adversely…
    Plz help coz the deadline is 1st dec’10 as per my agent.

    1. Saurav

      I had no idea , but now as you have already taken the plan , please give the info on this


  48. Anil says:

    Reason why Indians dont like Term Insurance :

    Ths biggest reason could be that there is no Gaurentte to get the assured valuse back to your kin.

    As people in India have to pay bribe to collect back their PF contribution at retirement.
    So there is assurance on papaer for returs in case of death but its more like laws return in constitution. Useless when you really need it or procedure is so tedious that its next to impossible.

    If you put this factor for accounting “not taking Term Poilicies” than you will see a different picture.

    1. Anil

      Insurance is different that the PF thing , what you are talking about is mainly PF in case of govt . Yes thats a different case

  49. Saurav Sinha says:

    HI every1…
    2day my agent told me about a policy…BSLI Dream Endowment plan wherein for Rs 50 lacs life cover for 30 years term you need to pay Rs 50K for 5 years only & after term matures return is also possible considering 10% RoR. I am confused coz for investing Rs 2.5 lac here instead of Term Insurance of same conditions, Im getting the same life cover plus some return. I request Manish & other participants to please help me in taking the decision… Term Insurance or BSLI Dream Endowment??

    1. Ajay says:

      I did a quick check on the BSL website and this is what I got

      Guaranteed Savings Amount Rs. 1,524,021
      Guaranteed Savings Date 30 years
      Basic Sum Assured Rs. 750,000
      Enhanced Sum Assured Rs. 0
      Policy Term 30 years
      Pay Term 20 years
      Premium Frequency Annual
      Policy Premium (Annual) Rs.50,000

      Which means by paying 50000 per year for 20 years I get the Sum Assured of 7.5 Lakhs and not 50Lakhs like you mentioned.

      At the end of 30 years I will get 15.25 Lakhs. For this I need to pay the premium of 50k for 20 years which itself comes up to 50k x 20 years = 10Lakhs

      For paying 50k per year you need to have approx 4k per month.
      Use the JI calculator “Future Value of SIP Payments” and you will be see whether it is worth to put money in this Insurance policy.

      1. Saurav Sinha says:

        Thanks Ajay…. I just got the policy 2day a’noon in hand..wanted to do a thorough check coz I’s also under suspicion…. 2moro Im gonna call the customer care n verify the facts…dint get time 2 go through the offer docs 2day…. Thanks again 4 a prompt response… r U a financial planner or an enlightened guy on financial planning?

        1. Ajay says:

          Saurav, just a reader of JI.

          1. Saurav Sinha says:

            G’morng Ajay & JIians….

            I talked 2 the cust care of BSLI, its like this:

            ## Basic premium: Rs 12K (min)
            ## Policy term: 30 yrs (max)
            ## Pay term: can be 5/10/15/20 yrs
            ## Basic Sum Assured = Basic premium* (10 or Policy term/2) which will come to 12K*15 = Rs 180000
            ## If you opt for Enhanced Sum Assured(optional) say Rs 50 lacs, your premium will be in addition to basic premium which if calculated for a 28 yr old guy & Pay term of 5 yrs will come to Rs 53000(Total premium for 30 years to be paid in 5 years).
            ## So in short you pay Rs 53000*5 = Rs 2.65 lacs for life cover of Rs 50 lacs (+ Basic sum assured+fund value) which will be paid to the nominee in case of the unfortunate event of your death.

            ## If you survive for the policy term, you get higher of the fund value or Guarnteed Savings Fund at maturity after 30 years which as per illustration taking 6% market return comes to around Rs 2.8 lacs
            Is there anything else 1 would like to add?

            If compared with a term insurance, it can be thought of as a viable option. The only thing is you pay all the premiums in 5 years but cover will be of 50 lacs.
            If compared with say SBI- Smart Shield for 50 lacs cover for 30 years term, the annual premium comes at Rs 9480(without any riders) as per SBI-Life website so we pay Rs 2.84 lacs.

            This is why I am confused!!!! Help me guys…..

            1. Saurav

              ok , let me jump in now .

              Saurav . The major reason why you are confused is because you are not able to understand the “present value” of both cases . You have two cases

              Case 1 : you can pay 53000 for 5 yrs and you get 7.5 lacs (as per Ajay) OR 50 lacs if you die
              Case 2 : You can pay 9480 for 30 yrs and you get 50 lacs cover

              Now you are confused which one is better. The biggest mistake you are doing here is you are looking at obsolute number which you are paying , but not the WORTH .

              In first case you are paying 2.65 lacs in 5 yrs and in case 2 you are paying 2.85 lacs in 30 yrs , both are very different and just because 2.65 is less than 2.85 does not mean that its cheap . Understand that money looses its value in future. So what you need to find out is current worth of Case 1 payment and case 2 payment . So what is the amount which if you pay today will be equivalent of paying 53000 in 5 yrs and waiting for 25 yrs and what will be the number which you pay today will be same as paying 9480 for next 30 yrs .

              Case 1 : I calculated it and it came to 2.21 lacs
              Case 2 : It came to 98k .

              Paying 2.2 lacs today one time is same as paying 53000 for 5 yrs and paying 98k is same as paying 9580 for next 30 yrs . This all is assuming you can get a return of 10% in next 30 yrs .

              Now if you compare the difference between case 1 and case 2 , you save 1.22 lacs in case 2 . So now if you invest this 1.22 lacs for 30 yrs , what can you get at the end of 30 yrs ? Even at the rate of 10% , its 20 lacs .

              I hope you got the internals on how most of the people do not understand numbers and feel these policies are great !


            2. For 30 yrs , I guess you will get 15 lacs in Birla plan , but still we can get 20 lacs in case 2 if you invest yourself , also we have just taken 10% return which is very low for 30 yrs, you can assume 12% and it would turn out to be 36 lacs, which is a good approximation .


            3. Saurav Sinha says:

              Manish, thanks a lot for jumping in….This’s the thing I’s thinking about… Money does loose value over a time period… But atleast this Plan’s not like few others where U’ve 2 pay huge amount 4 d entire term… People can opt 4 this Plan instead of LICs endowment plans, dont know whether LIC also has similiar plan in its kitty… And atleast I might get good return here also… Agreed it might not match Ur analysis… N plz lemme know how U calculated future worth of todays amount… It wud be great knowing such things…

            4. sunny rajpal says:

              It is very simple to calculate. Formula is
              current exp *(1+r) raise to n,
              where r is rate of inflation and n is the term period.

            5. Saurav Sinha says:

              Hey Sunny thanks a lot… R U a CFP or an enlightened JIian? By the way I’ve taken BSLI Dream Endowment Plan… Next thing on my radar’s to secure my Child education and marriage…

            6. Saurav

              Yea .. it was a simple formula of compound interest, you must have read it in school days also , anyways , now you should apply it and take your financial decisions faster


      2. Ajay

        I dont think Saurav mentioned that we will get 50 lacs back , he just said we get return at 10% IRR , which is again not the case you you have analyzed . good work


  50. Vinod says:

    Hi Manish,

    I have been a regular reader of your financial insights and it is really good and i have altered a lot of my holdings based on your suggestion.

    I just have one question
    I am 35 year old and have dependent (Mother, Wife and 1 year old daughter)
    I have been covered with Life Insurance & Accidental Insurance in the tune of 21 lakhs + 18 lakhs from my employer, so do you still suggest me to go for term insurance.

    your reply would be high appreciated.


    1. Vinod

      Truly speaking the answer will be given by you not me , So its back to you , you have life insurance of 21 lacs , now you die tomm , your dependent mother , wife and 1 child is without you and they have this 21 lacs . This 21 lacs can give them 15k monthly income for life , without increasing every year .

      So does it take care of everything from their monthly expenses like rent, house expenses , child expenses ,you mother medical expenses , you child school expenses comes in future for 15 yrs of school life , a college , higher education , her marriage , a better than now life style for your family , a good house in future and a better financial security for medical emergencies and many more kind of expenses which might arise in future .

      So if your answer is yes , 21 lacs is enough for all this , better tell me the whole plan in writing that how this 21 lacs can give them all this and if no then the answer will come from you only , not from me. I am just the motivator 🙂

      I would like to hear your answer and if you feel that NO 21 lacs is not enough then tell me how much more insurance you need and also tell me the date when you are taking this gift called term insurance for your family secure future incase something goes wrong . Dates ?


  51. Vinod says:

    Hi Manish,

    I have been a regular reader of your financial insights and it is really good and i have altered a lot of my holdings based on your suggestion.

    I just have one question
    I am 35 year old and have dependent (Mother, Wife and 1 year old daughter)
    I have been covered with Life Insurance in the tune of 21 lakhs, so do you still suggest me to go for term insurance.

    your reply would be high appreciated.


  52. Sanjay Gupta says:

    Every insurance policy will have a mortality premium. Return of Premium Policy will charge extra premium, over and above mortality premium, invest in market and return this extra on maturity. You still not get what you paid as basic mortality premium.

    Term plan has the benefit of higher cover at a nominal premium.

    Hence Best Buy.

    Invest extra money in stocks. Have trust in your wisdom and ability to invest your money to derive maximum benefit

    1. Sanjay

      Short and wonderful comment , it has all the knowledge in 5 lines .. great 🙂


  53. Raman says:

    Dear Manish
    It’ very very impressive and eye-opener article regarding importance of Term Insurance Plans. Anyone can say after reading his article it’s not a wastage of money.

    1. Raman

      I am glad you liked it 🙂 . Send it to all your friends


  54. Patro says:

    Recently I logged a request in Apana Paisa for a term policy and I explicitly mentioned that I am looking for a Term Policy.
    However one of their agent called me and informed that “Bajaj Allianz Invest Gain Platinum” is a like term plan which give insurance cover for 40 years if you pay premium for 15 years. In fact you will be insured for X rupees in case of you demise the your nominee will receive a claim of 4X rupees.

    While SBI Life shield term insurance is charging 10k for 35Lacs SA + 20Lac ADB for 25 years for a 27 yr healthy individual, this policy from bajaj Alliaz is charging nearly 33K. However Bajaj is providing an extended period for coverage 40years which no one else is giving.

    So my queries are –
    1. is this product from Bajaj Alliaz is a term plan, becoz it is also promising survival benefits.
    2. Is there any fine print that I am missing here.

    Let me know your views.

    1. Patro

      The term plan from bajaj is called Term Care : , InvestGain is a ULIP


      1. Patro says:

        Thanks Mashish,
        I categorically asked him whether it is a ULIP, he said it is a traditional policy but also has benefits of Term Policy. Do you have any link which shows it as a ULIP policy?

        Also, what is your view on the other query?

        1. I think I made a mistake , this seem to be a different product but not exactly term insurance, its a kind of return of premium term insurance kind of thing .


  55. Balbir says:

    I have taken the term insurance from SBI after waken up by jago investor ( 2 month before My B’day 🙂 )

    As a eye witness, the branch staff who who accepted my form signed on that. I am wondering whether it is fine or it should be some friends or relative who should sign as eye-witness. Just want to know what is the role of eye-witness eye here. I am asking coz it is 30 year agreement. so better to ask random thought of my mind 🙂

    1. Balbir

      Hmm. I am not sure on that actually , but havent heard about this eye-witness thing:)


  56. Munna says:

    Hi Manish,

    Is it advisable to go for one term plan of 1Cr. or split it into two? In that case my premium will be high. If I opt for one term plan of Aegon Religere for 1 Cr, how is it? Is that company reliable? Or should I go with LIC?
    Please advise.

    Thanks & regards,

    1. Munna

      For now you can avoid AR , you can reconsider them after some time , You should split your insurance with two .


  57. Bal says:

    great article .
    Here i have question?,
    Is there any where i can look into the analysis of the term insurance(not including other insurances) claim ratio, which insurance company is paid more claims in case of term insurance?

    1. Bal

      As far as i know , we dont have that data seperated out from overall insurance claim ratio figures .


  58. Chaitanya says:

    Looking for ur suggestion: I took LIC Term policy 3 yrs back and as a second one looking to take REligare’s. In addition to these term policies and health insurance policies, I heard there are policies for accident/disability too? Can u throw some light on those and whats the best among the available policies? I believe term life ins + health ins + acc/dis ins are required to cover 100%.

    1. Chaitanya

      You can take stand alone policy for Disability/accidental insurance or have it in term of rider from your term insurance .


  59. Madhu says:

    Hi Manish

    Is the Term insurance comes under any tax savings sections.


  60. Munna says:

    Hi Manish,

    Thanks for this great blog. I was actually planning for a term plan for Rs. 25L/25yr of iTerm-AR. My present financial status is as below:
    My Age: 39yr, Income: Rs.68K/pm, Home Loan: 26L/20yr (EMI: 25K/pm), Auto Loan: 4L/5yr (8.5K/pm). I had taken LIC of 5L Endowment Policy (Rs.1.7K/pm premium) 10yr back maturing in 2030 (58yr).
    Can you please suggest me keeping in view of all my EMI/Expenses (I have two dependants- spouse & girl baby 5M old):
    1) Should I go in for a term plan? If yes, amount/term/which company?
    2) Should I surrender my existing LIC policy & club with term plan?
    3) Any children plans & retirement plans need to think of?

    Thanks & regards,

    1. Munna

      1) Run !! get term insurnace of atleast 1 crore , just after reading this Point 1 .
      2) Run again !! . Incase you are reading it , make sure you surrender your LIC
      3) If you have not run yet , no need to run now .. Children and retirment plans are mainly ULIP’s . stay away from those for the reasons which I would encourage to find in this blog


  61. nimesh says:

    If someone regularly invests in half the requirements of insurance in term insurance & half in sip directly in stock market for 15 to 20 years, one will get 15-20% returns surely, the data suggests.how that kind of working is.

    1. NImesh

      Its not clear what you want to say ? Also just keeping investing and not checking the investments and not using strategies like asset allocation and rebalancing will not help much , there are times when even 10 yr time frame like 1992-2002 have not been of much help in equity .

      Its dangerous to make general statements everytime


  62. Hardik says:

    Hi Manish,

    I think you have missed out one of my comments above (no. 92)… pls. reply to that.

    Thanks & Regards,

  63. Girish says:

    I was planning to invest in Aviva New young scholar child education plan as one of my friend has already taken for his child’s education. It seems pretty good. Also i checked the Aviva Educost tool and it seems i might need around 80 lakhs for my child’s further studies. He is only 5 years old now!

    Please let me know anything you know about it


    1. Girish

      We at this blog do not recommend ULIP’s . I think you can plan for it yourself using mutual funds , have a look at archives


  64. Sunil Date says:

    @manish, I heard a programme on BBC after a hurricane created a havoc in USA. The insurance agent was lamenting that people avail health insurance or fire insuirance and at the end of the period feel sad that they have lost their premium; unknowingly implying that they would have been happy if they had fallen sick and claimed from their medical policy or that their home / office / godown had caught fire so that they could have claimed from their fire policy. They don’t seem to be happy that they have not fallen sick or that their belongings have not been lost in a fire.
    Same applies to TERM policy. They don’t seem to see the financial security of their family during the policy term; they seem to only concentrate on what they lost. Sad is’nt ?

    1. Sunil

      definately , Most of the people ask what do they get from term insurance , for them “getting something” is equal to “getting money back” , however they never think about what they are getting as “peace of mind” , “protection” etc .


  65. Hardik says:

    Hi Manish,

    Thank for the great work that you’re doing in spreading awareness and right information. I read each and every questions and ur replies and answered many of my doubts too.

    However, I have a specific query and would be glad if you can reply. I am 30 yrs old, married and have daughter who is less than a year old. I already have couple of LIC policies totalling to a paltry 3.5 lacs Sum Assured. One is mine (sole) mostly Jeevan Anand (i guess) and other is with my wife, which is LIC Jeevan Saathi.

    However, I have rightly decided now to go for a term plan for my long term insurance and decided to invest in MF + PPF for other returns. (read investment) I have come to know of a very good (longest age cover) term plan from Bharti Axa called Elite Secure. It has an option of “upto Age 75” insurance cover. The premium for a 30 yr. person like me is Rs. 9825/- for this 45 years of life coverage of Rs. 25 lacs. With a 20 lac more rider of accident, the premium with tax etc comes to approx Rs. 13800/-. I also read about ur iTerm comments and visited Religare Aegon’s website and saw all its details. It is definitely cheap and value for money. However, I think the 75 yrs coverage that I am getting in Bharti Axa is very unique and not seen elsewhere.

    What do you suggest for me in Term Plan? I am well aware that dependency on my income will be reduced after 60 yrs or so… However, a thought comes to me that chances of normal death will also increase post 60 yrs. (barring accidental death) and upto 75 years. So, this 75 yrs cover seems more practical in that case.

    Can you please and help me decide whether this plan is worth going for or not? (Also, after 60 yrs, rider benefit as well as premium goes away, so I pay again 10k approx. premium per annum after i reach 60 yrs… in the year 2040!) I think I can easily manage 10k that time as its value would be really less.

    1. Hardik

      Looks good , You can choose this plan . However dont you want to split the insurance in 2 companies ? You can also take cover just for 60 yrs , what difference will it make if you go for 60 yrs or 75 yrs , anyways no one will be Financially dependent on you after 60 .


      1. Hardik says:

        Thanks Manish for the quick reply. Yes, I also think splitting the insurance between two companies is a good idea as per that logic and atleast one company can pay the SA if the other one does not or takes undue long time. I will be taking two term plans as and when I am sure with my decision.

        Yes, I agree that no one will be financially dependent on me after 60 or maybe after 65 at the most. For that matter, even my wife is working since long and plans to continue her job/career. And presently I have dependent parents and my kid daughter as a dependent. Even father is currently working elsewhere post his retirement. However, I read an article in Outlook Money and even in general it is said that taking the life insurance for the longest term is the best option. What is your take on that belief?

        Secondly coming back to iTerm of Religare Aegon, though I consider myself quite net-savvy and forward looking, I still feel a bit insecure taking that policy online as the doubts do crop up in back of my mind regarding the reliability of that company and its long term prospects… Agreed that all ins. cos. are backed up by IRDA, but who knows what is the situation say after 25 or 29 years from now!! (If I take a 30 year plan) By the way, do they have 35 year plan in iTerm? Because I prefer a term plan till 65 yrs of age rather than 60.


  66. Manish says:

    Good work . appreciate your good work to spread good knowledge on Term insurance . Keep it up


  67. Venkat@Life Insurance says:

    Hi Manish,

    ULIPs are good for people who knows nothing about the importance of insurance and often neglect the premiums and lose their insurance cover. They don’t read blogs (what are these) and don’t know what is a financial planner but controls a lot of money.

    The percentage of these type of people is huge in India. ULIPs have one advantage though over term plans. The mortality charges in ULIPs depends on the age and increases every year which is like yearly renewable term insurance plans which are available in western countries. With this ULIP is a smarter choice than going to level premium term insurance where a 30 year old will be paying much higher than what his actual life risk is.

    The commission is high because unlike MF, ULIPs are sold not bought.

    1. Venkat

      I agree with you oveall , the mortality in ulips is low , however they are subject to increase every year unlike term insurance , so from long term they should be at the same level ? No ?


    2. Sunil Date says:

      @ Venkat, At last I have found somebody who sees the benefits of yearly renewable term insurance. No body, including the stalwart Financial planners appearing on the business channels, have understood this concept. ULIP’s do provide this benefit. But any body & every body seems to advice to drop a ULIP like a hot potato.

      I maintain that any prudent financial plan should include a combination of Term + Whole lIfe + ULIP for life cover. The % allocation will depend on the required cover and the available surplus. This combination gives the benfit of affordability, adequate cover, flexibility of premium deferment, holidays &, withdrawals along with tax free pension and a estate for dependants.

  68. Kavita says:

    Hey Manish,

    I am still in the spree of reading your earlier blogs, so hence here I am asking you one more Qs.

    I tried the click2insure.com site but there is some problem, it just shows the page with the phone number for assistance and nothing else.


    1. Kavita

      it says “This Site Is Under Construction and Coming Soon.” . For now i would say use apnainsurance.com for any thing related to insurance .


  69. Nilesh says:

    Hi Manish,
    I am about to take the Term Plan but my Insurance Agent advised me to go for Jeevan Saral. What is your view on this? How can we compare Term Insurance with Jeevan Saral. Agent tells me that you will get returns in Jeevan Saral

    Please throw some light on this

    1. Nilesh

      For now , say “go to hell” to your agent and take term insurance , we will look later why it makes sense
      also , try to analyse Jeevan saral from returns points , use IRR to calculate returns , see my IRR post .


  70. I know its difficult for companies to launch such policies, but with the current competition in Insurance industry, you never know. I totally agree to your point but still i would like to see some plan in future which can give more reliability to customers and help them to plan their financial obligations with least expense.


  71. I think companies can make profit out of the premiums paid by an insurer during the term. The profit margin would be very less but certainly companies can make profit. Insurance and hotel industries are two different things, how can you compare these two. In insurance the chances of death is very rare, so profit margin is very high.
    If companies really want to attract their customers they have to come up with some plan in which both will get equally benefited. I think you are thinking only form company point of view, try and implement same on yourself and think that if you are buying the same policy, you will get the answer.
    I don’t want to involve in any debate over here, it just the way i think.

    1. Yogesh

      I dont think Companies would do this atall .. Its would be a substantial thing to do , with same insurance premium , giving back the premiums back at the end , is not feasible from business point . they will go in loss in that case . They have to increase the premium otherwise they wont be able to generate the returns so much that they can pay back , its not feasible business wise .


  72. Nadesh says:

    Is there a term insurance that i can take in joint between me and my wife, so that is anything happens to one of us the survivor gets the money? I am 32 yrs old.

    1. Nadesh

      There is no term plan like that !! . there is one LIC policy called Jeevan something , but thats not recommended . Better to take seperate ones .


  73. Your post is amazing for those how don’t want to even think about life insurance. Its true that most of people think the same way u have written. People feel that if they don’t die within the term there will be no benefit. But there can be other reasons for not investing in term life insurance. In India most of the people are having hard earn money, they don’t even want to waste a single earned money. So if a company ensures them, that after term gets end they will get all paid premiums back, most of the people would love to invest in term life insurance. And if you will look from companies point of view, a company can easily invest his paid premiums and earn interest on it. So this way both can be in win win situation.
    As you said people are not taking insurance just to save 2 months salary, i want you to think in this way that why companies are hesitating to pay such a small amount to their loyal customers.

    1. Yogesh

      thanks for your comment 🙂 . But the thing is that investors can use that same extra premium they pay for “return of premium” policies and then invest it in better way . look at : http://jagoinvestor.dev.diginnovators.site/2009/04/return-of-premium-term-insurance-is-it.html


      1. 😀 I think you are not getting my point, you are talking about existing “Return of Premium Term Insurance” plan. My point is companies should come up with such policies in which investors doesn’t have to pay extra premiums to get “return of premium” at the end of term. Premiums should remains same as in simple Term life insurance plan and at the end of term they should get their premiums return.
        I hope u understand this time 😉


        1. Yogesh

          that does not make sense actually for the insurance companies , So its like this , you go to a restaurants and order food which you did for so many days and suddenly you are asking them to add a dessert to that whole package at the end with same price , so you are asking them to reduce their profit margin and benefit you directly , that does not make business sense to Company .

          If they are going to return the premium at the end , they are going to charge for it for sure .

          Am i clear ?


          1. Tarun says:

            Hi Manish,

            I think the point Yogesh is trying to make is that if 3.5Lac(the total premium paid) after 30 years is such a small amount (as you have quoted to be roughly two months expenses for that year) then why doesn’t the company pay it back if its such a small amount.

            So quoting it in terms of your example you have been ordering food for last 30 years and paying the money. Over these 30 years the restaurant has also made big profits/progress from these and other payements. Now if at the end of the term customer asks for his paid amount. It can only buy say a spoon of icecream. Then Yogesh’s question is why are these companies not ready to give that if it is valued so less according to the article 🙂

            Hope it helps getting some clarity. 🙂


            1. Tarun

              Thanks for your comment . In my example also the dessert would cost atleast 10-15% of the original cost.

              If you read Yogesh comment again , what he wants is the superior product at the basic product price , If that was feasible for the company commercially , they would have done that .

              For simple term insurance , the premium they charge already takes into consideration the mortality rates , other charges they have to shell out , their profit margin etc . So this is ALL you can get ! . Its a business

              If you ask insurance companies to return the premiums in the same price . It means you are asking them to shut down their business !

              I hope you get my point here 🙂


  74. Naveen Mittal says:

    Hi Manish,

    I am looking for a medical insurance policy for my brothers family. In his family total 2 adult and 2 childerns. I am looking for a flotter policy upto 4 lacs. And looking for less premium with maximum benifits. My brother’s age is 30 years.
    i enquire with a agent, he suggest me Reliance health wise silver plan, where premium is very less. i also check star family health optima and united policy. But i am totally confused with all these policies.
    Can you please advise me which policy is good for family, which will give good benifits. i am not only looking for less premium only, i can pay bit much but needed a good policy. because this is one time we have to pay. And also know that we have to go for private policy or govt one.
    Please help me in this..
    Waiting for your response.

    Naveen Mittal

    1. Naveen

      Make sure you dont compromise with the features of the health insurance policy for the cost. Its fine to pay more but make sure you get all what you desire , we buy for getting features , not less cost .

      Also , note that you will not get any tax benefit on this as you get benefit for premium paid on spouse , child , parents , that it

      check apnainsurance.com to do your own comparision .


  75. Dharmendra says:

    Hello Manish,
    Hope u r doing well.
    I want to go for term insurance plan and compare the quote on policybazar.com also and found the iTerm plan is the cheapest. My query is as under:
    1.I want to go for 50 Lacs insurance, would be good to go with one company only?
    2.Any idea whether it covers terriorist attack ?
    3.Maximum 25 years only?
    4.I have heard about Star health insurance for senior citizen? Can give idea how it is?

    1. Dharmendra

      iterm is the cheapest one , but the claim ratio of company does not look good at the moment , hold on on this one .
      the policy is for max 25 yrs old by design , not sure if they cover terrorist attack .


  76. Vijay says:

    Hi Manish,

    Thanks a ton for all your advice. After going through all the articles and discussions on this site and applying some common sense, i just bought a 50L i-Term policy from Aegon Religare. Now looking to buy another one of equal amount from SBI or LIC.

    But i still have few questions:

    1. SBI Life shield has options to choose for sum assured increment by 5 % every year or 50% every 5 years. But in my opinion this doesn’t make sense because, as your age increases, it’s obvious that your accumulation of wealth also increases and hence may require “less” sum assured. This means, there should be a term policy which will reduce the policy amount as life progress. The advantage with this kind of policy is as your age grows, the amount of premium you need to pay will also decrease and hence less burden. What’s your opinion on this?

    2. Accidental death benefit. I’m still confused about this benefit. If i do NOT opt for this benefit rider, does it implies that i will NOT get any sum assured for a term assurance policy upon death due to accident?

    Thanks in advance

    1. Vijai

      1) It depends on your condition and personal income growth levels . There are people for whom 5% thing works and for some it does not . So it it does not work for you , you should not take it . Its like we have different options , one has to take it if its fits or see some other thing .

      2) No its not like that . You will get sum assured even without that benefit , Accidental has other features also like in case of permanent and partial disability you get money and on death you get extra money .


  77. R Subramanian says:

    Hi Manish,
    Nice article exploring the myths people have and makes sense.
    what are the best investment choices for NRIs? your advice will be appreciated

  78. Rajesh says:

    Dear Manish,

    I am 33 yrs old & currently earning 27000/- per month after taxes. I have investments over stock market worth about 12 lacs. I don’t have any other investments or insurance covers. I would like to know from you, which’ll be a suitable insurance plan for me.
    My father is 60 yrs old, earns 1.5 lacs P.M. Will he be able to take insurance, if so which plan will suit him?


    1. manish says:


      Who is financially dependent on you ? If there are , then you should be insured to an extent which can fill in the gap which you would have provided , see : http://jagoinvestor.dev.diginnovators.site/2009/11/how-much-insurance-cover-is-enough.html

      Regarding your father , there are two things

      – Who is financially dependent on him ?
      – How much earning capacity will be lost if he is not there and do you need to get lumpsum when he is gone ? I think he must have made most of his wealth by now and it wont be a good idea to insure him . The premiums would be really very high now .


  79. Brij Mohan says:

    Thanks a lot Manish.
    .-= Brij Mohan´s last blog ..DevWeek 2009 Slides And Source Code – Guy Smith =-.

  80. Brij Mohan says:

    Hi Manish,
    Hope you are doing good, I need your help in tax planning. I am 32 years old, earning 65,000pm. I currently want to invest 3000-4000pm in Mutual Funds, Open and invest 20000pa in PPF and 10000 pa in Term insurance. I want 1,00,000,00 life cover and sufficient money for my retirement. I am already covered 40,000,00 from my Bajaj Allianz UNITGAIN and Max NewYork Whole Life(With waiver, I have to pay till 55years of age) I am paying approx 44,000pa in all thease as premium. Can you please rebalance my investment and help me to reach my target for Sufficient Life cover and Retirement. And any other suggestion.

    Thanks in advance
    Brij Mohan
    .-= Brij Mohan´s last blog ..DevWeek 2009 Slides And Source Code – Guy Smith =-.

    1. manish says:

      Brij Mohan

      Financial planning requires a lot of other inputs and its not a minutes job . So I would say you should hire a financial planner , Dont refrain from paying him his fees. It would be worth the cost .

      For basic advice . Take an iterm cover for 1 crore becaue thats what will come in your budget of 10k PA . Better surrender your ULIPS and start systematic SIP’s in mutual funds and ETF’s . Also expose your self to GOLD etf’s .

      Keep ULIP’s only if you can use the switching facility efficiently .


  81. devang says:

    Thanks for your input.

    You see, I inquired about a cover of 1 crore. Any Term Insurance would have a premium of around 17k-19k annually. I am still to check the Aegon Religare plan. The Dream plan from BSLI is charging a premium of Rs. 21600 annually for the same cover. But it promises to give back around 1.27 lac @ 6% returns and 2.5 lac @ 10% returns. Whereas in the case of pure Term plan, we all know return is 0.
    Comparing the premium of the two, I have to pay around 3k on an average more annually, which I think is manageable.
    What do you think?

    1. Ajay says:

      I am not sure if I am doing this right, but here is what I did on the BSLI website for the Dream Plan Illustration page
      1. My age is 31
      2. I entered the Guaranteed Maturity Option as 100%, Guaranteed Maturity Benefit as 100,000, Benefit Term 25years, Investment Risk Option – Protector and Yearly pmt freq, Enhanced Sum Assured as 1 Crore
      3. When I calc the premium, I got premium as 25,108.00

      At the end of 25 yrs, if I am alive I get 164,740 @ 6% and 329,861 at 10%.
      Moreover the fine print says some part of this may be guaranteed and some part variable.

      Aegon Religare says 1 Cr SA is at 11k per annum where as Anmol Jeevan from LIC is 44k :O

      1. manish says:


        dont get into this .. better go for plain term plan + PPF + MF


  82. devang says:

    Hi Manish,

    I am planning to buy a Term Plan and had zeroed in on HDFC Standard Life. Recently, I came across another plan, a ULIP plan from Birla SunLife namely Birla SunLife Dream plan. This plan assures some maturity benefit. Do you think it is a good option to go for this Dream plan? The annual premiums for both, the term plan as well as the Dream plan are more or less the same. In this mail trail, someone has commented about the Dream plan and suggested that it is not a good option. But, as compared to a normal Term plan, there is at least some assurance of partial money back. What do you suggest?
    Thanks in advance.

    1. manish says:


      It would be tough to have a look at the policy as a whole, i am yet to look at it 🙂

      But my recommendation would be to go for Pure term plans . Its like your say something is more pure than water as a natural drink , may be !! .. but hard to beleive and very less chances (almost no chance) . so stick with term insurance .


    2. Ajay says:

      Devang, What about the sum assured ? Are they same as well ? Generally the sum assured for Term plans is higher and the premium is lower and the sum assured for ULIPs is a multiple of preimum paid (with market risks). I dont want to die (no one wants) and that too especially when the market is down. Think over this, do some homework and make an informed decision so that one doesnot have to repent from heaven :-).

      Good luck and Jeete raho 🙂

  83. Ajay says:

    Nice article dude.

  84. Nilesh Panchal says:

    Dear Manish,

    I am really impressed with your reviews. I would like to know if I go with Birla Sunlife HNWI Plan for Term Insurance Plan for 50L is it good plan?

    My age is 30 completed years. Please reply.
    .-= Nilesh Panchal´s last blog ..IILM Institute for Higher Education =-.

    1. manish says:

      All Term Insurance are same .. Nothing much different apart from the claim ratio .. Make sure you split your insurance and its cost effective to you . Take some iTerm


  85. Shantharam says:

    Hi Manish,

    Kudos to you for doing this great job of enlightening us with your financial planning tips.

    I have a query. I wish to have a Term insurance plan for myself for 30 lacs for a period of 25 years. I have zeroed in on SBI Life and Aegon religare.

    I have trust in SBI Life as it is there since more than 8 years now . However, Aegon religare has the lowest premiums i have ever seen for a term plan. But, it is just a year old. Do you suggest Aegon religare considering that it does not have any track record ?

    Also, recently i have seen a new plan called ‘iTerm’ from Aegon Religare which is even more cheaper. What do you think about this plan ?

    I also have a plan to split 15 lacs each among SBI and Aegon Religare if you suggest Aegon religare.

    Let me know your views..


    1. manish says:

      iTerm is really best right now .. I am coming up with a post on it in some days . SBI and AR both are good companies.. I feel you can go with iTerm , not at all an issue 🙂


      1. Shantharam says:

        Thanks Manish..

        On doing further analysis, i found that there is a term plan from Aviva called Aviva Life Shield Plus , for which the premium is lower than Aegon Religare’s level term plan if SA < 30 lacs, though the new iTerm plan now, is the lowest.

        How do you rate the Aviva Life Shield Plus term plan ? Also, how safe and reliable is it to apply for iTerm plan online?

        Thanks in Advance,

        1. manish says:

          Go for the iTerm plan , There is nothing wrong with online buying , India is now moving to ecommerse so fast and in coming days everything will be online , Not an issue 😉 . Aviva premium may be cheap for some age groups but not for all . I have nothing personal with them , but its like AR philosophy is great and they have an attitude towards Insurance 😉


  86. manish says:


    Its little tough to get a Health policy for a 57 yrs old , The Premiums are going to be really high ,However you should look for a policy at apnainsurance.com .


  87. Vinod says:

    Hi Manish,

    I am really impressed about your explanation regarding the jeevan Tarang policy.

    So could you suggest some heath insurance policy for old people 57 yrs (Father), 5oyrs (Mother) and 25yrs (daughter)


  88. Manish Chauhan says:


    Truly speaking I will take time to review policy . Policy review is the last thing I like and I have many more things on my plate right now . So try to understand the product yourself for now . Read more about it on net.

    thanks for understanding


  89. Anonymous says:

    Thanks Manish
    As far as I know these plans are some sort of SIP (??Please go thru plans I am not sure)since we have to pay our premium monthly except the 1st premium which is necessarily to be quarterly/half yrly/yrly. Plus piont (as told by agent) is that 1.)one can withdraw after 3yrs when u feel that NAV is at good price 2.)Switching over to diferrent kind of investment option as per market condition to avoid losses 3.)If u wait for 10yrs i.e. maturity ur earned units will redeemed at highest NAV locked during first 7yrs. Require ur help to take decision.

  90. Manish Chauhan says:


    Truly speaking , Even though I have not evaluated the policy , I am not very excited by this policy , I cant comment on it right now .

    But if your time horizon is 10+ yrs , I would say the best thing would be a SIP only. Let me find some time to find out how this policy is .. No promises 🙂


    thanks for providing the inputs 🙂


  91. Anonymous says:

    Thanks Yogi for giving me the details. Should I go for it? If yes then which one would u refer Birla sunlife or ICICI? My preference will be based on growth of fund since I cant wait upto 10yrs. After 3yrs when I will feel that current NAV is quite profitable then I may withdraw.


  92. Yogi says:

    benefit os icici pinancle

    Avail the highest NAV recorded on a daily basis, in the first 7 years of the fund, at maturity.
    Gain from an additional allocation of 3% of your fund value, at maturity
    Pay premiums for only 3 policy years.
    th Enjoy liquidity with Partial Withdrawal facility from 6 policy year onwards.
    Get tax benefits on the premiums paid and benefits received under the policy, as per the prevailing
    1 Income Tax laws .

  93. Anonymous says:

    Dear Manish
    I want to know about new ULIPs plan like BSLI platinum plus IV & ICICI pru pinnacle which says guaranteed returns as per HIGHEST NAV recorded in 1st seven from lauching date. How much better they are when compared to mutual funds?


  94. Yogi says:

    Hi Anonymous,

    Can u share ur ULIP and how this can be achieve which is mentioned in first comment by u.

    better explain by some example.

    I tend to disagree not in the sense you have written about mindset but I disagree that term insurance is best one.

    I will just give you my example. I have ULIP plan which gives 100000 insurance for every Rs. 1000 invested. And, if you are below mid 20's; that thing makes much more sense. Because you are ~15 years away when mortality charges of ULIP becomes more than term insurance. You can argue about next 10-15 years of term insurance where ULIP mortality charges are more; but even then if you do calculations then I bet taking term insurance at that time is much more beneficial (I am including more charges of term insurance at that time)

    Here what I am going to do is: pay premium for 3 years and then stop investing in it. Put 2 times of minimum required amount in ULIP and invest remaining amount somewhere else (Keep doing this for say every 2 years). For remaining ~12 years, I have term insurance premium available to invest somewhere else.

    After ~15 years of policy term; gradually reduce insurance portion of ULIP (or stop it) and increase term plan as per requirement.

    This is not at all advisable if you are already in your 30's.

    What do you think?

  95. Manish Chauhan says:

    @Yogi and @Anonymous

    I am not sure how paying 1000 for 100,000 of insurance in ULIP justifies that its better than Term .

    In Term Insurance , you get 10 Lacs of cover in less than 2,000 for a mid 25 yrs old person .. with this ULIP it will be 10,000 .

    Btw , I would like to know the name of the ULIP so that I can investigate more ..


  96. Yogi says:

    Manish can explain more and by example on first comment from Anonymous.How this can be achieve?

    I tend to disagree not in the sense you have written about mindset but I disagree that term insurance is best one.

    I will just give you my example. I have ULIP plan which gives 100000 insurance for every Rs. 1000 invested. And, if you are below mid 20's; that thing makes much more sense. Because you are ~15 years away when mortality charges of ULIP becomes more than term insurance. You can argue about next 10-15 years of term insurance where ULIP mortality charges are more; but even then if you do calculations then I bet taking term insurance at that time is much more beneficial (I am including more charges of term insurance at that time)

    Here what I am going to do is: pay premium for 3 years and then stop investing in it. Put 2 times of minimum required amount in ULIP and invest remaining amount somewhere else (Keep doing this for say every 2 years). For remaining ~12 years, I have term insurance premium available to invest somewhere else.

    After ~15 years of policy term; gradually reduce insurance portion of ULIP (or stop it) and increase term plan as per requirement.

    This is not at all advisable if you are already in your 30's.

    What do you think?

  97. Manish Chauhan says:


    Thanks for the appreciation , however that link which you gave is from ICICI , and is of not much use other than some good user interface .. read more at :


  98. naveen says:

    "Heyy , Thanks for dsipelling many myths I had regarding term insurance, Thanks for that insight . It has really helped me understand a lot! 🙂 Have been searching for tutorials on how to plan for insurance according to my budget and needs, especially health insurance .. This tool came in handy too! Enjoy 🙂

  99. Manish Chauhan says:

    @A Day

    well if its 1 or 2 yrs .. then i would say its fine .. but if family planning is many years away , then you will be wasting premiums for initial years

    Its true that later on your premiums will be higher , but you also have to keep in mind the premiums wasted initially .. If you take a 50 lac cover for yourself and your wife and pay 12k + 12k as premium .. you will pay 1.2 lacs in 5 yrs total .. now if you take it after 5 yrs and may be your premium rises to 15k and your Tenure is left 25 yrs more .. then you will pay 3k+3k = 6k extra for 25 yrs , which is 1.5 lacs .. but you also wasted 1.2 lacs in initital years .. so total 30k of profit in numbers terms (not real money value) .

    You have to do similar comparison for your case , the numbers i took was just an example .. anyways .. i think we are thinking too much (which is good) .. If you have already taken it .. then better continue 😛


  100. A Day says:

    @Manish ,

    The reason why i started the insurance is that , though we do not have dependents now ,it will not be the case in few years when we choose to start a family .

    My understanding is that the annual premiums will be higher if i start a policy after 5 yrs then the premium i have to pay now .

    Please share your views .

  101. Manish Chauhan says:

    @A Day

    If you people do not have Financial Dependents then better not to take Insurance for each of you .

    I know some Insurance amount will help in filling up the emotional pain , but only that much part is logical to take . not more .. because loosing life is a very low probability event , most of the people do not even get anything from their Term Insurance ..so most probably it would go like that only .. I say this for you because in case one looses life , the other one will not be too much financially impacted , but incase one doesnt want other person to do job after one is gone , in that case Insurance will make sense ..

    Its like doing something after understanding its impact .. you are smart I know 😉 take your call 🙂


  102. A Day says:

    @Manish ,

    Thanks for a quick reply . I guess I'll surrender the policy .

    About the policy on Wifes name , though both of us do not have any other dependent for now , since we earn almost equally , i decided on taking similar policy for both of us

  103. Manish Chauhan says:

    @A Day

    Nice .. Congratulation on taking such a decision .. by default all the LIC endowment policies work this way ..

    If you have paid 3 year premiums after that they acquire a surrender value which you can take by stopping the policy , but this amount would be very less .. generally 30-40% of your Premiums paid + Bonus accumulated .

    Or you can take your Premiums paid + Bonus accumulated till date at the end of the policy , which will be penneis are the end .. Its your choice now .. Getting in that policy was a wrong decision and getting out is even harder .

    Anyways .. you have taken the best decision of taking term insurance , however just make sure that taking Insurance on your Wife life is right decision only if there are people who are financial dependent on her , incase there will be no impact financially incase she is not there.. even taking term insurance is a wrong decision 🙂


  104. Manish Chauhan says:

    @The Green Man

    Yeah .. you are correct , The agents are more interested in the commisions they earn rather than the blessing of investors they get ..


  105. A Day says:

    Hi Manish ,

    This is more of a question the comment .
    I have got married a year back . My wife had a LIC endowment policy earlier (since 3 yrs ) for which she pays a premium of 25000 for sum assured of 5lakh . Now I have got her a term policy of 50 lakhs for which the premium is around 18000 per annum .

    Should I discontinue the Endowment Policy , also Can will I loose the Premiums paid till date (around 75K)

  106. The Green Man says:

    Hi Manish,
    Another thing I would like to point out is that, it looks like the agents themselves don't better commissions on Term insurance. I still remember how reluctant our agent was to get the paper work done etc. In fact initially he even acted as if he didn't properly know what it was and he kept on telling me 'no one takes this saar.. its just waste etc etc'. After I said i wont take any insurance from him other than term insurance, he started the paperwork etc.

  107. Manish Chauhan says:


    Yes , but people take Insurance as Investment products and thats the reason they feel that Insurance if for them and their family both 🙂


    That would depend how authentic your claim is , If you are talking exactly about the time duration which is fast , I am not sure on that , but it wont be too different .


    thank you sir 🙂

  108. Davon says:

    Another eye opening article.
    Please accept my gratitude.

  109. Vivek Rastogi says:

    I am going to purchase Term Insurance but still confuse from which company I will purchase ?

    LIC or HDFC

    who will settle claim easily ?

  110. MONEYMANAGER says:

    hi manish
    nice article again,
    point to keep in mind here is that insurance is not for us but for others(read dependents),
    take care bro

  111. Manish Chauhan says:


    Nice points from you .. People buy other insurance because its mandatory 🙂 .. How about making Term Insurance compulsory for everyone 🙂


    Why do you say that ULIP provide more death benefit than term cover . it cant be true i think , do you have data to show that ?

    With the other points i agree with you 🙂


  112. Anonymous says:

    dear all. welcome!!
    It is true to say ulips give more death benefit than pure term plan.
    Aggreed, but while selcting for such good ulips ,many many innocent policy holders fell prey to very greedy,unethical life agents.
    for ex. DREAM PLAN from birlasunlife offers ENHANCED SUMASSURED if opted.it looks good on paper but i personally observed after seeing many account statements(I work as a agent),the policyholder looses more money due to other charges in the form of units.
    so donot believe ulips after 3 policy years gives risk cover for your entire life FREE.seen personnally many polices lapsed in such cases due to lower fund value.

  113. Anonymous says:

    dear all. welcome!!
    It is true to say ulips give more death benefit than pure term plan.
    Aggreed, but while selcting for such good ulips ,many many innocent policy holders fell prey to very greedy,unethical life agents.
    for ex. DREAM PLAN from birlasunlife offers ENHANCED SUMASSURED if opted.it looks good on paper but i personally observed after seeing many account statements(I work as a agent),the policyholder looses more money due to other charges in the form of units.
    so donot believe ulips after 3 policy years gives risk cover for your entire life FREE.seen personnally many polices lapsed in such cases due to lower fund value.

  114. Ranjan says:

    Two points: One, We all insure our cars and two wheelers where we don't get anything if there's no accident. It's pure term insurance and we don't debate minutely there.

    Two, most of our financial advisors discourage people when it comes to term insurance. Unfortunately the hidden reason is low commission compared to endowment and ULIPs.

    My feeling is people will buy term insurance if they are properly educated /informed. Which is against the business interests of our friendly insurance agents.

    1. Venkat@Life Insurance says:

      Wrong, the commission in insurance is higher than ULIP. 2000 Rs premium term insurance gives more commission to the agent than a 30000 Rs single premium ULIP.

      What do you think which policy is sold and bought more?

      The single premium one. Because it is easy to sell a 30,000 premium ULIP than 2000 premium term policy. Don’t just blame insurance agents.

  115. Manish Chauhan says:


    You can go to click2insure.in or insurancemall.in or http://www.apnainsurance.com/life-insurance-india/compare.html to compare life insurance .

    There is no mandatory rule to break your Insurance in 2 , but it is recommended as it will diversify the risk of declining the claim by both and it will give more control to you to decrease your cover later by just stopping one of them .

    Also , you can go for any company , no need to go for any one or be afraid of consequenses .


  116. Kiran says:

    Hi manish,

    good article,
    How to choose Different companies are offering life insuarnce at different premium rates of same some assured.

    choose govt one like LIC or any other private one like ICICI,Aviva which is have less premium

    is it required to go for 2 plans having less premium instead of single large premium

    please suggest me…


  117. Manish Chauhan says:


    Not term insurance , but Insurance itself is not required if you dont have financial dependents .

    However , you will soon get married , so it would be ok for you to go for Term insurance now for some amount, even though your parents do not depend on you , you might want them to get some good money incase there is any unfortunate event . once you get married , you can go for some additional cover then .

    You can also wait till you are married. Congratulations by the way 😉


  118. Rahul says:

    Hey Manish,

    I guess, term insurance is only beneficial to persons who have someone financially dependent on him/her.

    Im 28 years, not yet married, my parents does not depend on me financially – in this case should I opt for a term insurance?
    I am approaching 30 soon, should I opt for a term insurance since I guess that the annual premiums will increase once we are 30+ (Im assuming that I will get married by 30, hopefully.)

    Thanks for ur time.

  119. Manish Chauhan says:


    yeah , you are correct man .. Thats the reason we should increase the cover also as time passes , or atleast take insurance where there is option of automatic cover increase of 5% every year .

    @Manickkam , Your article was good .. i read it .

    @Excel Matic

    sure , i will tell you how i did it .

    So the yearly premium came as 11,800 per year .So his total premium outgo in 30 yrs would be

    11,800 * 30 = 354000

    Now we calculate his montly expenses after 30 yrs

    Current Monthly expenses = 25,000
    Inflation = 6.5%
    Time = 30 yrs .

    This will be calculated as normal compound interest formula

    that would be A * (1+r)^t

    = 25000 * (1.065)^30
    = 165359

    So his future montly expenses is 1.65 lacs where as he is getting 3.54 lacs (remember , we assumed that you get all your money back in Term insurance) , which is just 2 times of his montly expenses . 🙂

    Let me know if you still dont understand , i will make you understand over phone or meet you in person if you are in bangalore .

    Thanks for asking 🙂 , have a great day . See my video post on basic calculation if you need more .


    1. Jagan says:

      Hi Manish

      I have a couple of friends who always feel, its stupid to buy term plans, howevr i try to explain they dnt seem to understand. i stay in bangalore, can i bring them all and can you meet us and make them understand with your calculations

      1. manish says:


        What do they say when they read this article .. I am fine with meeting you guys and making you all understand that term makes sense . If they are not convinced , tell me . We can do something 🙂


        1. Munish says:

          I think if some body still cant understand with Manish’s lucid explanation, one cant understand in person also. Why to waste money and timer over this. Just read it once again.

          1. Munish

            I think his parents have not read this article


    2. rohit says:

      Hi manish

      do you stay in bangalore , i never know that I am also in bangalore

      1. Rohit

        Yes i stay in Bangalore


    3. karthik says:


      Need your expert advise on the below mentioned questions

      I am in total dilema, I need a term insurance So the question is Online or Offline- Since this in itself should not become a headache.

      Best Instrument for my Kids education- who is 3 months old

      Best Instrument to build for my retirement?


      1. KK

        You are looking at things from very high level, Each of your questions should be discussed in detail . Anyways

        1. This has to be from your trust level . I mean online will be cheap , but then if you dont trust and dont have confidence, then dont go for it .

        2. Equity Mutual funds

        3. Equity Mutual Funds


  120. Manish Chauhan says:


    Mortality charges for ULIPS are less than Term insurance ? Is it ? If thats true , it may be because mortality charges depends on age, gender and health and sum at risk . you also need to take into consideration some points

    – If you your Fund value comes down and is equal to one year premium , your insurance cover stops and policy terminates .

    – Mortality charges are proportional to Sum at risk , Sum at risk is "Sum assured – your Fund value" and mortality charges are deducted on monthly basis . If there is a bad time and fund value decreases then the mortality charge goes up and up marginally .

    What you are saying may be correct but for a particular scenario . We should concentrate on Worst case always or atleast average case .

    My motive was to exaplin why we should keep it simple and Term plan + SIP in mutual fund us a simple thing which everyone can understand .

  121. Excel Matic says:

    "Which means , he is going to pay total premium of 3.54 lacs in his entire life . How even if he gets this money back at the end , How much will it benefit him ? How many months can he survive on this money ? 2 months is the answer !! , With expenses of 1.65 lacs per month , the money he gets back from term insurance is enough for not more than 2 months , Lets take maximum 3 months."

    I have some doubts in the calculations that you have done above. Can you post some details??

  122. Manickkam says:

    @Manish I completely agree with you. See this post for more details on my comments Term Insurance – Advantages

    @Anonymous. Read the above blog post. At any scenario, Term Insurance beats any other insurance. you should compare ULIP with Term Insurance + Mutual Funds and not just with Term Insurance.
    Also, There are heavy initial charges in ULIPs which makes it a worst product. Given that, they have reduced the initial charges of ULIP now, it has become an average product now. But still, Term Insurance + Mutual Funds beat ULIPs by leaps and bounds.

    Also, Always have the Insurance and Investments separately.

  123. Vats says:

    Nice one.
    Manish I think taking 6.5% inflation even the total insurance amt of 50 lacs will be peanuts after 30 years.
    What I mean to say is during 30-40 age a sum of 50 lacs makes sense..but 40-60 still u have only 50 lacs insured value ? I think it must be more…isn't it ?

    1. Vijaya Kumar says:

      50 Lac may be peanut after some time, but by that time you might have accumulated properties right. If you have enough investment keeping future in mind and issuance for current commitment then it is fine. I think you need to consider your asset and accordingly you can adjust your insurance requirement. If you do this then 50 LAC insurance may not be peanut.

  124. Anonymous says:

    I tend to disagree not in the sense you have written about mindset but I disagree that term insurance is best one.

    I will just give you my example. I have ULIP plan which gives 100000 insurance for every Rs. 1000 invested. And, if you are below mid 20's; that thing makes much more sense. Because you are ~15 years away when mortality charges of ULIP becomes more than term insurance. You can argue about next 10-15 years of term insurance where ULIP mortality charges are more; but even then if you do calculations then I bet taking term insurance at that time is much more beneficial (I am including more charges of term insurance at that time)

    Here what I am going to do is: pay premium for 3 years and then stop investing in it. Put 2 times of minimum required amount in ULIP and invest remaining amount somewhere else (Keep doing this for say every 2 years). For remaining ~12 years, I have term insurance premium available to invest somewhere else.

    After ~15 years of policy term; gradually reduce insurance portion of ULIP (or stop it) and increase term plan as per requirement.

    This is not at all advisable if you are already in your 30's.

    What do you think?

    1. Sohil says:

      Sorry but which ULIP gives 100000 insurance on 1k investment…tell me …i invest 10k premium annually and i get sum assured 1k more than money invested so far

  125. Manish Chauhan says:


    Its again a Endowment policy .. doesnt makes sense to me .




  126. ARAVIND says:

    what do u think about jeevan saral
    of lic of india.

    1. Nilesh says:

      well planned means to make you fool by all LIC agent. All the returns said by them are false coz till date no any maturity claimed. and agents calculate all the retunrns on the base of past returns. (They says lie)

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