Why Term Insurance is the Purest and Smartest Life Cover for Indians

When it comes to protecting your family’s financial future, term insurance is the simplest, most affordable, and most effective life cover you can buy. Yet, despite its many advantages, term plans remain misunderstood in India.

Many people still think: “Why buy term insurance? There are no returns!” Others settle for inadequate cover or delay purchasing until later in life, when premiums become far more expensive.

In this article, we’ll bust the myths, explain the benefits, and show you how to make smart decisions while buying term insurance.

Busting the Biggest Myth: “No Returns = No Value”

A common belief is that term insurance is a waste because there is “no maturity value.” This is misleading.

The reality is:

• Term insurance gives you something more valuable than returns—peace of mind and financial security.
• It ensures that if something happens to you, your family can still meet their expenses, repay loans, and achieve long-term goals like children’s education or marriage.

Think of it like car insurance—you don’t call premiums a waste if you don’t file a claim. Similarly, term insurance is about protection, not investment.

Why Term Insurance is Better Than Traditional Policies

Unlike endowment or ULIP plans, term insurance is a pure risk cover. That makes it:

1. Affordable Yet Powerful

• A 30-year-old can get ₹1 crore life cover for around ₹800–900 per month.
• The same cover through an endowment plan could cost 25 times more amount!

2. Simple and Transparent

• No complicated investment components
• No confusion on returns or bonuses
• Just straightforward financial protection

3. Flexible Options

• Choose coverage for 10–40 years, or till age 60–70+
• Select payout options (lump sum or monthly income)
• Add riders (critical illness, accident, premium waiver) for extra protection

How Much Cover Do You Really Need?

The golden rule: Buy coverage of at least 15–20 times your annual income.

👉 Example: If you earn ₹10 lakh per year, your coverage should be ₹1.5–2 crore.

This ensures your family can:

• Cover daily expenses for 15+ years
• Repay existing debts like home or education loans
• Handle inflation and future life goals

For more precision, you can calculate using the Expense Replacement Method:

1. Estimate future household expenses
2. Add liabilities (loans, EMIs)
3. Adjust for inflation (5–6% annually)
4. Subtract your current assets/savings

This gives a realistic coverage number, often 10–20x your income.

5 Mistakes to Avoid When Buying Term Insurance

1. Delaying Purchase
   • Premiums rise sharply with age. Buy as early as possible.
2. Choosing Low Coverage
   • Saving on premium but leaving family underprotected defeats the purpose.
3. Opting for Short Tenure
   • A short policy may leave you uninsured in later years when cover is hardest to get. Always cover till retirement age (60–65).
4. Hiding Medical Information
   • Concealing health issues or smoking habits may lead to claim rejection. Be 100% honest.
5. Focusing Only on Premium
   • The cheapest plan isn’t always the best. Always check the insurer’s claim settlement ratio (CSR) and other important metrics for reliability.

Riders: Smart Add-Ons for Extra Safety

• Critical Illness Rider: Lump sum payout if diagnosed with a major illness like cancer or heart disease.
• Accidental Death & Disability Rider: Extra payout in case of accident-related death/disability.
• Premium Waiver Rider: Future premiums waived if you face disability or critical illness.

These riders add small extra cost but big extra value.

Online vs Offline: Which to Choose?

• Online Term Plans: Cheaper, transparent, easy to compare, quick to buy.
• Offline Plans: Offer personal guidance and support with documentation.

👉 What matters most is not the mode of purchase, but ensuring:

• High claim settlement ratio (98%+)
• Adequate coverage (15–20x income)
• Trusted insurer with financial stability
• Riders suited to your profile

Tax Benefits of Term Insurance

• Section 80C: Premiums up to ₹1.5 lakh annually are tax-deductible.
• Section 10(10D): Death benefits are tax-free for your family.
• Section 80D: Health-related riders may offer additional deductions.

However these tax benefits are only applicable for people filing their income tax under Old Tax Regime.

Final Thoughts

Term insurance is the foundation of financial planning. It is:
✔ Affordable
✔ Transparent
✔ Reliable
✔ The purest form of protection

Remember:

• The best time to buy term insurance is as early as you start earning. The second-best time is today.
• Don’t let myths or procrastination endanger your family’s future.
• Insurance is protection. Investments are for wealth creation. Keep them separate.

Secure Your Family’s Tomorrow, Today

At VR Finserv, we help you:
✔ Calculate the right coverage for your needs
✔ Compare the best term insurance plans in India
✔ Choose trusted insurers with strong claim settlement records

💡 Don’t delay. Protect your loved ones with the smartest life cover available—term insurance.

👉 Connect with VR Finserv today for personalised guidance.