Seven Money Resolutions for 2011:
#3 — Purchasing Life Insurance: Think BIG; Start small

by Vinaya HS on December 27, 2010

in Finance

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Resolution #3:
I will buy term life insurance online. Because I’ve only had terrible experiences with life insurance agents and medical diagnostics laboratories, I will purchase a simple term policy online. I will also ignore all those complex financial models that tell me that I need to insure myself for crores of rupees out of the box (heh!). I will think BIG but start small.

My (mis)adventures in trying to buy term life insurance are legend to regular readers of this blog. From agents who suddenly go missing, to direct marketers who blatantly ask you to lie on the application form, to totally clueless medical diagnostics centers (ironically called Clumax), to insurers who force you to surrender a defunct endowment policy prior to applying for a term policy, I have seen it all.

I’ve also grown tired of those life insurance calculators whose “artificial intelligence” output tells you to insure yourself for crores of rupees. When you can’t buy a term policy for even a rupee, dreaming about insuring yourself for crores of rupees is quite sadistic.

Hence, in 2011, my strategy to buy term life insurance is:

  • No life insurance agents. No direct marketers. No diagnostic labs. Online and faceless is my only option left.

  • Research term policies that I can buy online (only a handful as far as I know). Sum assured will be a [relatively] small but decent amount and for the longest tenure available.

  • Surrender my now long defunct LIC Jeevan Anand endowment policy. Use the proceeds for paying the initial premium on the term policy.

  • [Assuming that I get the policy,] Wait for six months and double my coverage through a second term policy. (And if luck is on my side, repeat this strategy in 2012 — possibly through a different insurer).

Think BIG. Start small. Be faceless. That’s my strategy.

What do you think?

Note: If an emergency fund, health insurance, and zero-debt together form the core of your personal finances, disability or personal accident insurance constitutes the layer on top of the core, with life insurance when you have dependents forming the third layer.

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 }

Anil December 27, 2010 at 12:14 AM

Yes, you’re right.
There are plenty of cheap Term Plans available online now. I would recommend you either of the three:
1) Aegon Religare iTerm Plan
2) ICICI iProtect
3) Kotak e-Term

All the above plans are valid. But, the questions is we do not know if the insurance will be paying the amount on the death of the individual.

Vinaya H S December 27, 2010 at 10:39 AM


True. Especially after reading these statistics.

My guess is that the higher the amount of insurance cover the lesser is the probability of your dependents seeing a payout. Example: The chances of receiving a Rs 10 lac payout would be much higher than the chances of receiving a Rs 1 crore payout.

Badri January 20, 2011 at 9:52 AM

What’s your recommendation for buying an online Term insurance plan?

Vinaya H S January 23, 2011 at 10:41 AM


I’m still evaluating the available options.

Damodar February 26, 2011 at 12:37 PM

Have you found success in buying a Term Insurance online? I am looking at the same option but still sceptical about the service.

Vinaya H S February 28, 2011 at 3:49 PM


Not yet. I’ve postponed my buying decision to April/May 2011.

Damodar May 31, 2011 at 4:51 PM

Any update on the above?

Rakesh June 9, 2011 at 10:17 PM


Have you bought any term plans yet?
If yes please share your feedback, I am looking to buy one (add to my LIC term plan).


Murali October 8, 2012 at 12:03 PM

Hey Vinaya. Thanks for your article. Just this year in 2012, I purchased a LIC policy (50k per year). Now as I understand to surrender the policy and get any money from LIC, I have to pay 1lakh more (50k each for the next 2 years). Would you suggest me to continue paying it for the next 2 years or just leave it with the first 50k itself. How much will i get after paying 1.5 lakhs for 3 years. Any suggestions?

Ajay October 13, 2012 at 6:42 PM

Hi Vinaya,
I accidentally came across your blog today. Went through couple of your articles, its making me only curious to go through the entire blog, which I will eventually. :)
I have plans of buying a term insurance for past 2 years and could not zero on one. I have given myself time till october end, so wanted to know if you bought a term insurance. If yes, which one?
Thanks & Regards

Anil Kuppa October 14, 2012 at 3:51 PM

Hi Ajay,
I am also a regular reader of the blog. Vinaya has created this page : where he regularly reviews the term plans available. Of the plans so far he has reviewed, AEGON Religare iTerm Online Term Plan is the top ranker.
In fact, this plan AEGON Religare iTerm Online Term Plan has also been ranked one of the best in ET Wealth weekly edition too.

Hi Murali,
In my opinion, you could just forget about the amount paid. You can have a look at the different posts on Jeevan Anand or LIC policies and calculate to check how much you get. While calculation, ensure that you keep the point “Time Value of Money” for the right calculation.


sherry August 8, 2013 at 7:20 AM

I want to surrender/stop my lic, jeevan saral policy before 3 years. What options do I have to recover my money. Like taking loan against it and not repaying them etc!!!!??

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