Step 1 — Determine How Much Coverage You Need
The Human Life Value (HLV) Method: Coverage = Annual Income × 10 to 15. If your annual income is Rs. 10 lakhs, aim for Rs. 1 crore to Rs. 1.5 crores in coverage.
The Needs-Based Method — A More Precise Approach
- Income replacement: How many years would your family need financial support? Multiply annual expenses by number of years.
- Outstanding loans: Home loan, car loan, personal loan — full outstanding balance.
- Future financial goals: Children's higher education, marriage, etc.
- Emergency fund: 6–12 months of household expenses.
Pro Tip: Do not underinsure. Many Indians are significantly underinsured — the average coverage is only 5–6 times annual income. Aim for at least 10x, ideally 15–20x if you have significant liabilities.
Ready to Protect What Matters Most?
Our certified advisors will help you calculate the right coverage, compare top plans, and make sure your family is protected — at no cost to you.
Step 2 — Choose the Right Policy Term
Your policy term should ideally cover you until your youngest dependent becomes financially independent, your major liabilities are fully paid off, or you reach retirement age (typically 60–65).
Remember: It is cheaper to buy a longer term plan upfront than to buy a shorter plan and try to renew or buy a new one later — premiums increase significantly with age and any health conditions that develop.
Step 3 — Evaluate the Claim Settlement Ratio (CSR)
| CSR Range | What It Means | Our Recommendation |
|---|
| 97–100% | Excellent — insurer settles almost all claims | Ideal choice |
| 94–97% | Good — reliable insurer | Acceptable |
| 90–94% | Average — proceed with caution | Compare carefully |
| Below 90% | Poor — high risk of claim rejection | Avoid if possible |
Ready to Protect What Matters Most?
Our certified advisors will help you calculate the right coverage, compare top plans, and make sure your family is protected — at no cost to you.
Step 4 — Compare Premium Costs
- Age: The younger you are, the lower your premium.
- Gender: Women often get slightly lower premiums.
- Smoking/Tobacco status: Smokers pay 30–50% higher premiums.
- Health conditions: Pre-existing conditions may increase premium or lead to loading.
- Occupation: High-risk occupations (mining, aviation) attract higher premiums.
Get quotes from at least 3–5 insurers before deciding. The cheapest plan is not always the best plan.
Step 5 — Decide on the Premium Payment Mode
| Payment Mode | Description | Best For |
|---|
| Regular Pay | Pay throughout the policy term | Steady income earners |
| Limited Pay | Pay for shorter period (5, 10, 12 years) but stay covered longer | Business owners, variable income |
| Single Pay | Pay entire premium upfront | Large lump sum availability |
Step 6 — Choose the Right Payout Option
- Lump Sum: Full amount paid immediately. Simple, but requires financial discipline from the nominee.
- Monthly Income: Paid as a regular monthly income for a fixed number of years. Easier for families to manage.
- Lump Sum + Monthly Income: A portion upfront for immediate expenses; rest as monthly income.
- Increasing Monthly Income: Monthly payout increases over time to account for inflation.
Ready to Protect What Matters Most?
Our certified advisors will help you calculate the right coverage, compare top plans, and make sure your family is protected — at no cost to you.
Step 7 — Select the Right Riders
| Rider | What It Covers | Worth It? |
|---|
| Critical Illness Rider | Lump sum on diagnosis of specified critical illnesses | Yes, highly recommended |
| Accidental Death Benefit | Additional payout if death is due to an accident | Good add-on for many |
| Waiver of Premium | Future premiums waived if you become disabled or critically ill | Strongly recommended |
| Terminal Illness Rider | Early payout if diagnosed with terminal illness | Yes, for peace of mind |
| Income Benefit Rider | Monthly income to family on death, in addition to lump sum | Situational |
Step 8 — Disclose Everything Honestly
Non-disclosure of medical history, lifestyle habits, or income is the leading cause of claim rejection. Always disclose:
- Any existing or pre-existing medical conditions
- Smoking, alcohol, or tobacco use
- Family medical history (heart disease, diabetes, cancer)
- Hazardous hobbies or occupation
- Other insurance policies you hold
A slightly higher premium because of honest disclosure is far better than a claim rejection when your family needs it most.
Step 9 — Review the Policy Document Carefully
Before paying the first premium, read the policy document thoroughly. Pay specific attention to: exclusions, grace period and lapse conditions, freelook period (usually 15–30 days), revival conditions if the policy lapses, and nomination and assignment clauses.
Step 10 — Review Your Policy Periodically
Life changes. And your insurance should too. Review your term plan after a salary increase, after marriage or having children, after taking a major loan, and every 3–5 years as a general practice.
Ready to Protect What Matters Most?
Our certified advisors will help you calculate the right coverage, compare top plans, and make sure your family is protected — at no cost to you.
Frequently Asked Questions
How much term insurance is enough for a 30-year-old earning Rs. 10 lakhs per year?
As a general rule, aim for at least Rs. 1 crore to Rs. 1.5 crores in coverage. If you have a home loan or other significant liabilities, you may want to add that amount on top of your income replacement needs.
Should I choose a longer or shorter policy term?
A longer policy term is generally better. It locks in a lower premium and ensures coverage during your most financially active years. Most advisors recommend coverage until age 60–65.
Is it better to buy term insurance online or through an agent?
Online buying is often cheaper (lower premiums due to no agent commissions) and transparent. However, if you need guidance on choosing riders or comparing plans, an unbiased advisor (not an agent working on commission) can add significant value.
What should I do if my term insurance application gets rejected?
Insurers sometimes reject applications due to health conditions or high-risk lifestyles. You can apply with a different insurer, explore modified covers with exclusions, or consult a specialist advisor to understand your options.
