Is term life insurance still the cheapest way to protect your family?

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For years, financial planners have said that if you want to protect your family’s future, a term life insurance plan is the simplest and most affordable option. You pay a fixed premium every year, and if something happens to you, your family gets a lump sum payout. The catch? There’s no maturity benefit — if you outlive the policy, you don’t get your money back. That’s why it’s cheap.

Premiums are rising, but cover is still unmatched

In the past couple of years, premiums for term insurance have gone up. This is partly because insurers are pricing in higher mortality risks and medical costs. For example, a 30-year-old might now pay Rs 10,000- Rs 12,000 annually for a Rs 1 crore cover, compared with around Rs 7,000 a few years ago. Even so, no other insurance product gives you that much coverage for so little money. Endowment and ULIP plans may look attractive because they promise savings or investments, but the coverage is usually a fraction of what you get with term.

When term insurance works best

Term insurance makes the most sense if you’re the primary earner and your family depends on your income. It ensures that if you’re not around, your spouse, children, or parents have financial stability — whether that means paying off loans, covering children’s education, or just managing daily expenses. The rule of thumb is to buy a cover worth at least 10-12 times your annual income.

Where you should be careful

Not every rider or add-on offered with term insurance is worth it. For example, critical illness riders can be useful, but they push up your premium. Also, many people buy too small a cover just because the premium feels low — which defeats the purpose. It’s smarter to stretch your budget a bit and buy a larger cover that actually secures your family.

FAQs

1. Can I get my money back if I outlive the policy?

Yes, some insurers now offer “return of premium” term plans. They refund your premiums at maturity, but the cost is much higher. In most cases, a plain term plan plus separate investments is more economical.

2. Is it better to buy term insurance online or through an agent?

Online plans are usually cheaper because there are fewer distribution costs. But if you prefer hand-holding and advice, an agent might be useful. Just be careful of being nudged toward expensive plans you don’t need.

3. What if I already have life insurance from my employer?

Employer-provided cover is a bonus, but it often ends when you leave the job. It’s rarely enough to protect your family fully. Buying your own term policy ensures continuity and adequate cover.