📖 5 min read | Insurance | April 2026
This might be controversial in a country where LIC is almost a religion, but here is an honest truth that every financial advisor privately agrees with: traditional LIC endowment and money-back policies are poor investments. They mix insurance with investment and end up being bad at both. A typical endowment policy gives returns of about 4-5% per annum — less than inflation and lower than even a basic FD.
A 30-year-old non-smoking male can get ₹1 crore life cover through a term insurance plan for approximately ₹700-900 per month. If something happens to him, his family gets ₹1 crore. If nothing happens (the most likely outcome over a 30-year term), he has paid a relatively small premium for three decades of peace of mind.
Compare this with an LIC endowment plan. For similar ₹1 crore coverage at age 30, the premium would be roughly ₹5,000-8,000 per month. After 20-25 years, you get back a lump sum with effective returns of 4-5%. Meanwhile, if you had bought term insurance at ₹800/month and invested the remaining ₹4,200-7,200 per month in even a simple PPF or SIP, your corpus would be substantially larger — and your family would have had much higher protection all along.
A practical method: add up these four numbers. First, 10-15 times your annual income (to replace your earning capacity). Second, your total outstanding loans (home loan, car loan, personal loan). Third, future education costs for your children (₹20-50 lakh per child for professional education). Fourth, subtract any existing savings and investments your family can access.
For most middle-class families with one earning member bringing home ₹8-15 lakh per year, a cover of ₹1-1.5 crore is a reasonable starting point. The goal is that if something happens to you tomorrow, this payout can clear all debts, fund your children's education, and provide enough corpus that the interest or SWP can sustain your family's lifestyle for years.
Term insurance premiums are locked in at the age of purchase. Buying at 25 versus 35 can save you 40-50% in annual premiums over the entire policy tenure. At 25, you are also more likely to be in excellent health, which means lower premiums and no exclusions. Every year you delay, the cost goes up — and the risk of developing a health condition that increases premiums or causes rejection also rises.
Claim settlement ratio (should be above 95%), sum assured options, premium waiver riders, critical illness add-ons, and the flexibility to increase cover later. Major insurers like HDFC Life, ICICI Prudential, Max Life, and Tata AIA all offer competitive term plans. Compare quotes online — platforms like PolicyBazaar let you see premiums from multiple insurers side by side.