Life Insurance is like a parachute, if you don’t have it the first time you need it, there is no second chance.”
– Luis A. Ortiz Haddock

Considering Insurance as an Investment is the common mistake most people make. In fact, one should buy term insurance policy to financially protect their family in case of any unfortunate event. Based on our interaction with few clients, we thought it is important to spread some knowledge on Term Insurance.

Let us consider an example:
Mr. X who is 50-years old works as a manager in a textile plant. He has a 18 year old son and a 22 year old daughter. Mr. X’s daughter finished her education and is looking out for a job. He has the responsibility of his daughter’s marriage. During this process, Mr. X suddenly died due to cardiac arrest, and his family felt helpless. Thankfully, he had a Term Insurance cover of Rs. 2 crore that he bought a decade ago, and this amount was payable to his family as death benefit. This amount comfortably covered expenses not just towards his daughter’s marriage but also his son’s higher education.

So, buying a term insurance plan is a crucial decision because, it doesn’t just provide a lump sum amount for your loved ones but also looks after their dreams that you have planned for them. It is quite simple; your life is insured until you pay regular premiums. In case of your unexpected demise, the insurance company pays out a lump-sum amount to your family that can bring financial stability and also aid in paying off any liabilities you left behind.

So, we have compiled a list of things you should consider while buying term insurance policy.

  1. Buy an adequate Insurance Cover:
    Deciding on how much cover you should get is important and should be taken very carefully. A lot of people pick a random number like Rs. 1 crore, which seems adequate to them. Do not make the same mistake. 
    You need to have an adequate coverage to cover all your liabilities like home loans, living expenses of your family for at least next 20-30 years and the future goals like a child’s marriage, education etc.
    Note when you calculate these expenses, you need to consider the rate of inflation. Once you have that number, round it off to the next highest number. It is better to be over insured rather than being under-insured.

  2. Disclose the information correctly:
    It is advisable not to lie to your insurer. Do not hide the details like smoking, drinking, family health history etc. to save on the extra premiums. If you do so, you are actually breaching the contract with the company and later on your claim will be rejected & and also invalidate the policy. 
    Therefore, you should disclose all the information in the policy forms correctly; even verify it properly before submitting the same. 

  3. Always add a nominee name:
    While filing the insurance proposal form, make sure you put the nominee name. Ideally, a nominee can be your wife, or your children to whom you wish to pass on the benefits of the term insurance cover. 
    It ensures only the nominee will be the final person who receives the money in your absence.

  4. Disclose all of your Existing Policies:
    It is imperative to disclose all the details of your current insurance policies (including the name of the insurance company, the sum assured, and the policy number) before purchasing a new term insurance plan. Hiding these details could be one of the reasons for claim rejection.
  5. Add riders to Term insurance, if required:
    Term insurance riders give an additional benefit & coverage apart from the core life insurance policy, which pays only in case of the death of the policyholder.

Here are some riders to consider:

Accidental Death Benefit Rider – Accidental Death benefit riders pay an additional sum assured to the nominee in case of accidental death of the insured.

Critical Illness Riders A critical illness cover pays a lump sum amount to the family if the insured is diagnosed with a specified illness and that too, without sub-limits and any condition.

Income Benefit Rider– With this rider in place, the surviving members get additional income on an annual basis for a period of 5 to 10 years.

Waiver of Premium Rider– This rider works well when the policyholder fails to pay the future premiums due to accidental disabilities. Basically, the future premiums are waived off and the term insurance policy remains active.

You can choose the riders that offer you wide insurance coverage. So, it makes sense to understand your requirement first and then opt for the riders accordingly. There are additional charges to opt for any rider benefits.


Term insurance is one of the most sensible investments in your financial portfolio. This won’t only provide financial aid to your family but also act as a help to fund their future goals. 
So, by keeping the above-mentioned parameters in your mind, you can give your loved ones the life and security they deserve even when you are not around. 

About Us: Malpani Investments specializes in Investment Advisory and Planning. Our Mission is to provide financial freedom to our clients by understanding their financial goals and helping them plan, save, invest and be disciplined, so that they can stop worrying about money and lead a happy and healthy life.  We help them understand personal finance in order to eliminate the gap between where they are now financially and where they want to be. Helping them with a suitable investment decisions so that they can give more time to their family, health and life aspirations. 

2 thoughts on “Should you buy Life (Term) Insurance?

  1. It is the best time to make some plans for the future
    and it is time to be happy. I’ve read this post and if I could I desire to suggest you few interesting
    things or advice. Maybe you can write next articles referring to this
    article. I wish to read more things about it! I could not
    resist commenting. Perfectly written! What’s up, just wanted to say, I loved
    this article. It was practical. Keep on posting!!

Leave a Reply

Your email address will not be published.