Term Insurance Ignorance: Living life underinsured

Term Insurance Ignorance: Living life underinsured

So, first of all, what is Term Insurance? Term insurance is a type of life insurance policy that provides coverage for a certain period of time or a specified “term” of years. If the insured dies during the time period specified in the policy and the policy is active, or in force, a death benefit will be paid. Easy…. Right! and, why is this not so popular choice among the Indians, well there is no maturity benefit and money spent does not grow. Plain and Simple…..

To an extent, this may be considered the correct approach for the fact that the Term insurance plan pays no maturity benefit but also couldn’t be more wrong when considering the LARGER picture. If maturity benefit is a factor, then auto insurance coverage also does not provide any benefit until unless you met with an accident. The same principle goes for Health insurance also. Still, most of us opt for them. What most of us tend to forget that a term plan also has one more huge benefit apart from obvious death benefit, “THE PEACE OF MIND” to live your life without worrying about your closed ones in case of unforeseen situations.

According to a report presented by IndiaSpend, a data-driven, public-interest journalism non-profit initiative that analyses public policy around the Indian economy, education, healthcare and more. The average Indian has only 8% of what may be required to safeguard their loved ones from unforeseen personal and financial setbacks. This number stands nowhere if we look at global numbers to name a few its 44% in Japan, 67% in Australia and 84% in Taiwan.

One of the key reasons for this number to be this low can be construed to more people opting for traditional policies (LIC) or ULIPs. Though these plans also provide death benefits, they are not fully equipped to protect your needs. The insurance cover offered by these endowment policies is significantly lower than what is offered by term insurance plans. Under such plans, a high Sum Assured results in very high premiums which may be too expensive for most of people. This is a major reason for Indians not being adequately covered.

In the end, we need to understand that proper insurance coverage is a fundamental part of a great financial plan. We need to change our focus from what being lost in case of premiums paid for term insurance to what we achieve.

About The Author


With background in e-commerce and IT, Abhay manages operations and backend processes at SAKSHAM Wealth. He is a data cruncher and his expertise with MS Excel helps the team in research.

Related posts

Leave a Reply

Your email address will not be published.