Hi, I have dilemma related to Term Insurance. I am in early 30s and currently I do not have any loan or money related liabilities in life. So one really need to buy term insurance in life, even if they do not have any liabilities in life?

Ans: Term insurance is not only related to any loans or money related liabilities. It is also related to the future needs of your dependents. If you have dependents who are not working and have long term needs like retirement, children's education, etc, then you need to account these as your liabilities and factor them in. You need to calculate the amount required to satisfy those needs and avail a term cover which is equivalent to that amount.
Having a term plan early can lock in the premiums (you can always switch to a lower premium policy and discontinue one taken earlier) and the policy itself (In case you contract any illness, you may not be provided with a policy). You can take a base minimum cover and once the liability or goals increases, you have the option to top-up the cover at the prevailing premium rates.

Ans: You are asking the right question.
Thinking about term insurance shows strong financial awareness.
It protects your family when you are not around.
This is a wise and responsible step.

Let’s explore this from all angles.

» What is Term Insurance?

– It gives a lump sum if the insured person dies.
– No money is given if the person survives.
– It has no maturity or return benefit.
– It is pure risk cover only.
– Very affordable when compared to other life insurance plans.
– It offers high cover at low premiums.

» Why Term Insurance is the Best Protection Plan

– Family needs protection from income loss if something happens.
– Loans, EMIs, and school fees still continue after your death.
– A good term cover helps family live with dignity.
– No other financial product gives this protection at this low cost.

– It is like a safety net for your loved ones.
– Without it, your family may face financial stress.
– Especially important if you have dependents or loans.

» Term Insurance is Not an Investment

– Term plans do not build wealth.
– They are not for returns or tax saving alone.
– Their only job is to protect your family’s future.
– Investment plans with life cover are expensive and confusing.

– Many mix insurance with investment.
– That reduces insurance cover and gives poor returns.
– ULIPs, endowment, and money-back plans are not cost-effective.
– Term insurance gives full focus to protection.

» Ideal Cover Amount and Policy Tenure

– Cover amount should be 10 to 15 times your annual income.
– It must also cover your liabilities like home or personal loans.
– Add future family needs like education, marriage, and retirement.

– Policy term should match your working years.
– Usually till age 60 or retirement.
– After that, your investments should support your family.

» Term Insurance Premiums Are Fixed and Affordable

– If you buy early, premiums are very low.
– Premiums remain same throughout the term.
– Late purchase means higher cost and health checks.
– So, buy when you are young and healthy.

– Example: A 30-year-old pays very low premium for Rs. 1 crore cover.
– At 45 or 50, premiums rise sharply.

» Additional Riders Provide Wider Coverage

– Riders are add-ons for more protection.
– Some useful riders include:

Accidental Death Benefit

Critical Illness Rider

Waiver of Premium

Terminal Illness Benefit

– These riders improve coverage at small extra cost.
– But choose only if you really need them.

» Avoid Investment-Linked Insurance Products

– Endowment, money-back, and ULIPs give mixed benefits.
– They are expensive and offer poor returns.
– They give very low cover for high premium.
– These plans confuse people between saving and protection.

– Always separate investment and insurance.
– Invest in mutual funds for wealth.
– Use term insurance only for protection.

– If you already have ULIP or endowment, review it now.
– Check surrender value and switch to mutual funds.
– A Certified Financial Planner can help with this.

» Direct Online Policies May Not Be Right for All

– Direct term plans may look cheaper.
– But no personal guidance or help in claim process.
– Errors in filling proposal form can delay or reject claims.

– Better to take regular plan through a Certified Financial Planner.
– CFP ensures correct policy selection and form filling.
– They guide family during claim time too.

– You are not just buying insurance.
– You are buying peace of mind.
– So, professional guidance matters.

» Term Plans Are Not Just for Men

– Women also need term insurance.
– Especially if they are earning or co-borrowers in loans.
– Even homemakers may be insured for family safety.

– Death of a homemaker brings emotional and financial cost.
– Replacing her role may need paid support.
– So, term cover for women is also important.

» Group Insurance from Office Is Not Enough

– Most companies give group term cover.
– But that is only 1 to 3 times salary.
– It ends when you leave job or retire.

– It is not portable or flexible.
– It may not cover personal loans or family needs fully.

– You must buy personal term plan outside job.
– That gives long-term, custom protection.

» Term Insurance Gives Mental Peace

– Once term plan is in place, you feel secure.
– Your family won’t face money trouble after you.
– You can focus on work and goals without worry.

– It is the backbone of your financial plan.
– No amount of mutual funds or FDs can replace it.

» Buying Term Insurance is a Responsible Step

– It shows you care about your family.
– It is a selfless financial decision.
– You may not get returns, but your family gets support.

– That is the whole purpose of protection planning.
– Insurance is not for you, but for your dependents.

» How to Choose the Right Term Plan

– Pick a reliable insurer with high claim settlement ratio.
– Choose proper sum assured as per needs.
– Avoid unnecessary riders if not required.
– Fill the proposal form truthfully and carefully.

– Disclose all medical history and lifestyle habits.
– Mention nominee details correctly.
– Keep family informed about the policy.

– Take help from a Certified Financial Planner.
– They can compare and recommend suitable options.

» Final Insights

– Term insurance is the most honest insurance.
– You pay for protection, not for returns.
– It gives your family a chance to rebuild without you.

– Do not delay this important decision.
– Buy term cover when young, healthy, and earning.
– Do not depend on employer cover or low-value policies.

– Do not mix investment and protection in one plan.
– Separate term plan for safety.
– Use mutual funds for wealth.

– Consult a Certified Financial Planner.
– Review term cover every 3–5 years.
– Update nominee and details regularly.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment