Term Insurance — Pure Protection

A term plan pays the sum assured to your nominees only if you die during the policy term. If you survive, there is no payout (unless you buy a "return of premium" variant, which costs significantly more).

Why it works:

  • Premium is extremely low (₹8,000–₹15,000/year for ₹1 crore cover for a healthy 30-year-old).
  • High cover means real financial protection for dependents.
  • Simple, transparent, and exactly what insurance is meant to do.

    • Whole Life / Endowment / ULIP — Insurance + Investment

    These policies promise a survival benefit — either a maturity payout or investment-linked returns — plus a death benefit.

    The catch:

  • Premiums are 5–15× higher than term for the same cover amount.
  • Because most of the premium goes to the "investment" component, the actual death benefit is a fraction of what a term plan would provide.
  • Investment returns are often 4–6% — below inflation.

    • Side-by-Side Comparison

    | | Term Insurance | Whole Life / ULIP | |---|---|---| | Premium (₹1 cr cover, age 30) | ₹8,000–₹15,000/year | ₹80,000–₹1.5 lakh/year | | Death benefit | Full sum assured | Sum assured (may be low) | | Survival benefit | None (pure term) | Yes | | Investment returns | N/A | 4–6% typically | | Purpose | Pure protection | Protection + savings |

    The Verdict

    Separate your insurance from your investments. Buy term insurance for protection. Build your wealth through mutual funds and NPS. This approach consistently gives more cover and better investment returns than bundled products.

    > Altius Tip: If you currently have an endowment or ULIP, review whether the returns justify the premium. In many cases, surrendering after the lock-in period and reinvesting in a term + mutual fund combination delivers better outcomes.