Problem: What’s The Best Form Of Life Insurance To Have?

by Vinaya HS on July 12, 2007

in Finance

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A pure term-insurance plan.

Don’t throw your hard earned money at any of these: endowment plans, money back plans, whole life plans, children plans, special plans for men, women, or whatever, and unit-linked plans. These schemes try to make a monkey out of life insurance by attempting to invest (and at times, gamble) on your behalf. You pay ridiculously high premiums for ridiculously low coverage.

Let’s not even get into the combinatorially exhaustive but mutually exclusive hare-brained riders available with these schemes. Dig into the website of any insurance company operating in India and you’ll know what I am talking about.

The Simple Dollar says it best:

Insurance as an investment is a great investment for the insurance company but a terrible one for you.

Here’s a simple set of questions for you to answer:

  • How many among you were lured by the exotic sounding lacs-of-rupees/kickbacks -from-the-first-premium the insurance agent tempted you with while selling the policy?

  • How many among you pay Rs.50,000+ as annual premiums just because the agent conjured up magical figures as income tax savings?

  • Did you even know – or did the agent ever tell you – that there was something called as term insurance?

Be honest and drop a comment.

The idea behind life insurance is simple: you die, but do so without putting your family/dependents into financial hardship. You shouldn’t have to do that without having to first pay a fortune to the insurance company before you die. Unfortunately, the profit-minded insurance companies operating in India can’t understand this.

I’ve researched extensively on life insurance over the past month and have concluded that a simple no-frills pure term assurance plan is the best form of life insurance.

Don’t be taken for a ride. It’s your hard earned money.

Thanks for reading this article. I'd love to hear your opinion. Please use the comments section below to share your thoughts. I frequently write new articles that also cover several other aspects of personal finance including credit cards, financial goals, health insurance, income tax, life insurance, mutual funds, retirement planning, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.

{ 12 comments… read them below or add one }

S July 13, 2007 at 2:24 PM

whats the best ins from which company?

ಗೌತಮ್ July 13, 2007 at 3:14 PM

ಏನಿದು ಅಸಹ್ಯ. ‘S’ ಮತ್ತು ‘R’ ಗೆ ಸಾವಿರಾರು ಅರ್ಥಗಳು ನಾನು ಕಲ್ಪನೆ ಮಾಡಿಕೊಳ್ಳುವ ಮುನ್ನ ತುಂಬು ಹೃದಯದಿಂದ ನಿಮ್ಮ ಪೂರ್ಣ ಹೆಸರುಗಳನ್ನು ಬಳಸುವಂತವರಾಗಿ.

Vinaya HS July 13, 2007 at 5:46 PM

S, choose Life Insurance Corporation of India (LIC) simply for the reason that their policies come with a sovereign (government) guarantee. Private insurance companies do not enjoy such a backing. LIC offers two term assurance plans – Jeevan Anmol and Amulya Jeevan. You can go through the details at LIC’s website and decide what suits you best. Email me if you need any help.

Vinaya HS July 13, 2007 at 5:47 PM

G, nice font maga. Email maado nanagu.

Vishu July 16, 2007 at 6:57 PM

whatever being the noble idea of having an insurance…there is a debate going on to make insurance into a tradable instrument…what say???

Shashi February 25, 2009 at 9:40 PM

Just an additional FYI for anyone interested
A pure risk plan will provide a cover of around 20 lakhs at a premium of around 5k per year for a person below 30 yrs. An agent would be able to provide the exact amount. This is the best plan for people who have loans as their family’s financial future is covered in case of any eventuality.

I would say this is a must for any sole breadwinner in a family.

raag March 10, 2009 at 4:26 PM

Vinaya: haven’t seen any “life insurance” post from since a long time. i was shopping for a term insurance plan and am a bit confused. i am inclined to go with LIC (for the sovereign guarantee that comes with it and seeing the travails of companies like AIG etc.). but, LIC’s premium for term plans seems to be 40-50% higher than those from private insurance companies. plus, LIC doesn’t offer any riders (e.g. Accident Death Benefit, Disability, Critical illness). I am also not sure about the claims process of various companies. How easy or difficult is it for survivors to claim insurance benefit from various companies? What use is it having an insurance policy when your loved ones have to run pillar and post to claim it? What has been your readers’ experience on this. thanks a ton in advance.

Vinaya H S March 12, 2009 at 11:15 AM

@raag: Let me post this question for readers to answer. We can learn from collective experience.

rajesh joshi March 23, 2009 at 11:37 PM

please clear my confusion which term plan is best for me need 10 lakh cover for 5-10 years my adge is 36 years.i am considring for sbi life sheild ,lic anmol jeevan.

R S REDDY April 25, 2009 at 5:20 PM

yes! Anmol Jeevan is the best. you have to pay for your cup of coffee. If add on is required again premium loading which is available in endowment, money back etc., plans.

gursun June 16, 2009 at 2:15 PM


firstly i would like thank you for putting nice information in this website.

I would like to contact you please mail me your contact details


Jatin Khan September 18, 2009 at 5:11 PM

“Thanks for dipelling yths regarding what kinds of life insurance one should choose given the wide gamut of choices one faces ,the article has really helped me understand a lot! :) Have been searching for tutorials on how to plan for insurance according to my budget and needs, especially health insurance .. This tool came in handy too! Enjoy :)

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