India has a unique insurance problem: most policies people own are not insurance — they're badly disguised investment products. Endowment plans, money-back policies, ULIPs and whole-life plans all combine the two, badly.

What term insurance actually is

You pay a small annual premium. If you die during the policy term, your family gets the sum assured. If you outlive the policy, you get nothing — and that's the point. You bought protection, and you didn't need it. That's a win.

A healthy 30-year-old non-smoker can get a ₹1 Cr term cover for under ₹10,000 / year.

What whole life / endowment / ULIPs are

You pay a large annual premium. A small slice goes to actual cover (sum assured is usually 10× annual premium — pathetically low). The rest is "invested" — but with heavy charges, lock-ins and surrender penalties.

Typical 20-year return on these products: 4–6% IRR. A flexi-cap mutual fund over the same period: 11–13%.

The 3-step framework

Step 1: Buy adequate term cover

15–20× annual income, plus outstanding loans, plus future goals for dependents. Buy it from an insurer with strong claim settlement ratio over the last 3 years.

Step 2: Separately, build wealth through equity mutual funds

Whatever premium "savings" you'd have paid into an endowment policy, redirect into a flexi-cap or large & mid-cap SIP. Long-term compounding does the heavy lifting.

Step 3: Add health insurance

Family floater health cover is the other essential protection product. Don't confuse this with life insurance — they protect against different risks.

What about "I want my premium back"?

Return-of-premium (ROP) term plans return your premiums at the end of the term. Sounds great. Until you do the maths: you're paying roughly 2–3× the premium of pure term, and the "return" is just your own money back without interest. Pure term + the difference invested in mutual funds beats it every time.

The honest exception

Whole life policies can make sense for HNIs as estate planning tools — keeping a sum assured liquid for inheritance and tax planning. But for 99% of Indian retail investors? Pure term + mutual funds wins.

Don't ask "how much will I get back?" from your insurance policy. The point of insurance is that you never get the payout — because nothing went wrong.

If you'd like help calculating the right term cover for your income, loans and dependents — book a free call.