In short: If anyone depends on your income, term insurance protects them. It is cheap, simple and has no maturity amount, and that is exactly why it works.
The problem
In many Kerala families, “insurance” means an endowment or money-back policy, often bought from a relative. These policies mix insurance and savings. The result is often a small life cover and modest returns, for a large premium.
How term insurance works
- You pay a yearly premium for a fixed period, for example 30 years.
- If you die during that period, your family gets the full sum assured.
- If you survive the term, you get nothing back. That is why the premium is low.
Term vs endowment, side by side
| Term insurance | Endowment or money-back | |
|---|---|---|
| Purpose | Pure protection | Protection plus savings |
| Premium for the same cover | Low | Much higher |
| Maturity amount | None | Yes |
| Cover you can usually afford | Large | Small |
Many people follow “buy term, invest the rest”: take a term plan, and invest the premium difference separately.
How much cover?
A common rule of thumb is 10 to 15 times your yearly income, plus big loans like a home loan. Your real number depends on your family, your debts and your goals.
Before you buy
- Disclose your health and habits honestly. Hiding details can lead to a claim being rejected.
- Check the insurer’s claim settlement record.
- Buy health insurance too. Term insurance covers death, not hospital bills.
- Already have an endowment policy? Don’t surrender it in a hurry. The surrender value can be low, so get advice first.
Key takeaways
- Term insurance is protection. Investing is growth. Keep them separate.
- Buy it young: premiums are lowest when you are healthy.
- Honest disclosure is everything.
Your turn: Do you have a term plan, or only an endowment policy? What did you learn when you checked?
Education only. Not investment or insurance advice. Speak to a licensed adviser before buying or surrendering a policy.