Insurance Guide for India

Insurance types — what you need vs skip

Compare Term vs Money Back.

Term life — how much cover?

Rule of thumb: 10–15× annual take-home or enough to clear home loan + 10 years family expenses.

Anita (Mumbai): ₹1.45L in-hand, ₹38L home loan, spouse + child → ₹1.5 Cr term till age 60 (~₹18K/year online). Separate from bank's loan insurance pitch.

Health insurance — metro sizing

Vikesh (Jaipur): ₹10L family floater ₹14K/year + ₹20L super top-up ₹6K/year. Claim tip: Use network hospitals; pre-auth for planned surgery.

Medical inflation exceeds CPI — renew with restoration / recharge features if affordable. Section 80D Calculator for Old Regime tax.

Employer group cover is not enough

Personal policy continues regardless of employer.

What to skip (and why)

ULIP: Mixes insurance + equity with high charges; separate term + mutual fund SIP usually wins on cost and clarity.

Money-back policies: Low effective return, long lock-in, agent commission embedded — see Term vs Money Back.

Bank bancassurance without comparison: Branch RM targets; compare online term quotes same day.

Credit card payment protection: Covers tiny balance; read exclusions — not family income replacement.

Insurance + tax (Old Regime)

Term life premiums are low — do not buy endowment for 80C if ELSS/PPF/EPF fill bucket. Income Tax Calculator.

Real-world stack: Anita's protection budget

Protection before ₹45K/month SIP — if income stops, SIP without term is a family risk.

Nominee and claim hygiene

• Update nominee after marriage, divorce, child birth
• Store policy PDFs in shared family folder
• Disclose pre-existing diseases honestly — avoids claim rejection
• Keep emergency fund for deductibles and non-network hospitals

Common insurance mistakes

• Treating ULIP as SIP substitute
• ₹5L health cover in Mumbai — one surgery can exhaust
• No term cover while maxing home loan EMI
• Lapsed policy after one missed premium — grace period then void
• Hiding smoking habit on proposal form
• Relying only on employer cover through 40s

Insurance readiness checklist

✓ Term cover sized to loan + dependents ✓ Personal health floater active ✓ Super top-up if base < ₹20L in metro ✓ Nominees updated ✓ Premiums in monthly budget (Budgeting Guide) ✓ Emergency fund for co-pay and deductibles

Frequently Asked Questions

What insurance do I need first?

Term life if dependents exist, then health insurance — before equity SIP.

How much term insurance?

Often 10–15× annual take-home or outstanding home loan plus living expenses.

Is employer health insurance enough?

No — it ends with job loss or retirement. Maintain personal cover.

ULIP vs term + SIP?

Term + direct mutual fund SIP usually lower cost and clearer than ULIP bundling.

Health cover for parents?

Separate senior citizen policy or include in floater if age permits — 80D benefits under Old Regime.

Term insurance till what age?

Often till planned retirement (60–65) or until financial independence / loan cleared.

Claim rejected — common reasons?

Non-disclosure, waiting period for pre-existing disease, policy lapse.

Credit card free insurance?

Marketing perk — not replacement for term + health stack.

Insurance before emergency fund?

Mini buffer first, then term + health, then full emergency fund — sequence in Personal Finance Roadmap.

Where to buy term online?

IRDAI-licensed insurers directly — compare quotes; medical test may apply above sum assured.

Your action plan

1. Calculate term need (loan + 10× income) 2. Quote 3 online term plans 3. Buy health floater + consider super top-up 4. Add premiums to budget 5. Update nominees on all policies