Term Insurance Explained — Why It Comes First

Term insurance is pure life cover: you pay a modest premium, and if you die during the policy term, your family receives a large sum assured. It’s the foundation of any financial plan for someone with dependants — and it should come before investing.

Why term insurance first

If you have people who depend on your income, protecting that income is priority one. Term insurance replaces your earnings for your family if you’re gone — so a market dip or a half-built corpus doesn’t leave them stranded. No investment matters if a single event can wipe out the plan.

Why "term", not investment-linked

Term plans are pure protection — no maturity payout if you survive — which is exactly why they’re cheap. A healthy 30-year-old can often get ₹1 crore cover for a few hundred rupees a month. Bundled insurance-cum-investment products (ULIPs, endowment) give far less cover per rupee. The smart approach: buy cheap term cover, invest the rest separately.

How much cover

A common rule of thumb is 10–15× your annual income, adjusted for loans and goals (children’s education, etc.). Better too much than too little.

What to check

• Claim settlement ratio — how reliably the insurer pays claims.
• Term length — cover until you’re financially independent (often to ~60).
• Honest disclosure — declare health/habits truthfully, or a claim can be rejected.
• Waiting periods and riders (critical illness, accidental).

Buy early (premiums rise with age), buy enough, and keep it simple. Education only, not insurance advice.