Term Insurance Gap Alert
Why 99% Indians Are Under-Insured: The Biggest Mistake in Term Plans
Most families buy 5-10x lower cover than needed, leaving income, loans, and life goals exposed. Use this guide to calculate the right cover, pick the right riders, and avoid claim-time shocks.
Why Most People Stay Under-Insured
Surveys show families buy just ₹30–50 lakh cover while their need is ₹1–2 crore. The result: EMI stops, kids' education pauses, retirement dreams shrink. Here is what causes the gap:
Premium Anchoring
People choose cover to fit a monthly premium, not to fit the family's lifetime cash flow needs.
Ignoring Future Goals
Education, spouse retirement, and parents' care are rarely added to the cover calculation.
Underestimating Inflation
₹1 crore today is not ₹1 crore in 20 years. Inflation can halve real value in a decade.
Missing Riders & Disclosures
No critical illness or accidental rider, or incomplete disclosures, leads to claim rejections when support is most needed.
How to Calculate the Right Term Cover
Use a needs-based formula instead of a premium-based guess. A simple thumb rule is income x 20 plus liabilities and big goals.
Cover Formula (₹)
Annual Income x 20 + Outstanding Loans + Children Education + Spouse Retirement Corpus
Example: ₹10L income -> ₹2 Cr + ₹25L home loan + ₹20L education + ₹30L spouse = ~₹2.75 Cr cover
Coverage Checklist
- Replace income till spouse retirement (age 85)
- Pay off all loans (home, car, personal, education)
- Fund children goals (education + higher studies)
- Add 5-7% inflation buffer on goals
- Choose income payout for family cash flow stability
Illustrative Coverage Gap
Same household, different cover choices. The yellow bars show how far real needs are from the typical cover people buy.
Most people stop here
Covers income replacement
Adds loan payoff
Protects dreams too
Bars are illustrative for a ₹10L annual income household. Actual cover depends on personal data.
Age-Wise Premium Benchmarks
Indicative annual premiums for healthy non-smokers, level cover till age 85. Real premiums vary by insurer, lifestyle, and underwriting.
For smokers or medical conditions, premiums can be 30–70% higher. Exact premium only after full underwriting and disclosures.
Checklist Before Buying
Choose cover beyond loans. Check insurer strength and claim processes before you sign.
Claim Settlement Ratio
Prefer 97%+ with transparent grievance record.
Solvency & Ratings
Strong solvency margin; check IRDA reports.
Payout Mode
Income payout monthly helps replace salary for spouse.
Premium Term
Keep premium paying term shorter than retirement age.
Riders
Critical illness, accidental death/disability, waiver of premium.
Disclosures
Declare health, habits, travel, occupation honestly to avoid claims risk.
Common Mistakes to Avoid
Get the Right Term Plan, Not the Cheapest
We help you calculate ideal cover, pick strong insurers, structure income payout, and add riders that matter—so your family never has to compromise.
Disclaimer
Premiums shown are indicative and for illustration only. Actual premium and issuance depend on insurer underwriting, medical reports, disclosures, and applicable taxes.
Insurance cover adequacy is personal and should be reviewed regularly. This content is for education, not a solicitation or promise of returns. Please read policy wordings, exclusions, and riders carefully.
HRP WEALTH | 9327141436 | hrpwealth@gmail.com | IRDA Authorized Insurance Consultant | AMFI Registered Mutual Fund Distributor (ARN-342284) | Not a SEBI-Registered Investment Adviser
