There is so much written on Term Insurance by Personal Finance Journalists and Planners in various publications , that there is hardly anything which is left out. We would therefore cut it short by explaining you the entire concept and need of the product in a One Pager.

Term Insurance, also called Pure Risk Life Insurance is one of the cheapest ways to cover a large liability for a specific duration. The policy undertakes to pay the full sum assured to the nominee in case of death during the specific term. In case the person survives, then there is no maturity benefit payable. Though, there are ‘Return of Premium” options available, but these don’t turnout be cost-effective.

How to calculate how much Term Insurance you need?:

A. Take a total of all long term personal liabilities that you have – Personal, Car, Home Loans etc. Remember to add amounts where you have stood as a personal guarantor also.

B. Multiply your monthly salary by 100. So if your monthly salary is Rs. 50000 – the ideal cover you must have is Rs. 50 Lakhs.

• Sum Assured Cover on Term Insurance should be reviewed and upgraded every 2 years to match with your increased remuneration
• Term Insurance mostly should cover you till Retirement, assuming you would not have dependants after that. Since the max term that you get Term Insurance is 30, you should definitely review whether you need to take a fresh policy. Say, Mr. Kumar had bought a term policy when he was 25 for 25 years term. So this covers him till age 50, which in our opinion is lower than the ideal age 60 for retirement. One should therefore review whether on age 30 he should replace the current policy with a newer policy for a term of 30 and cancel the earlier policy after the new one is issued.

What is the average cost of this product?