Importance of Insurance Planning
Insurance is the foundation of financial planning. It protects your family's financial future in case of unexpected events. Without adequate insurance, your family's lifestyle and goals could be severely impacted.
Life Insurance Planning
- Term Insurance: Pure protection, most affordable, 10-15x annual income coverage
- Whole Life Insurance: Coverage + savings component, higher premiums
- ULIPs: Investment + insurance, market-linked returns
- For most people, term insurance is the best choice
- Coverage should cover debts, children's education, and living expenses
Health Insurance Planning
- Individual: ₹5-10L coverage recommended
- Family Floater: ₹10-20L for family of 4
- Consider top-up plans for higher coverage
- Start early to get better rates and avoid exclusions
- Review coverage annually as medical costs increase
Common Mistakes to Avoid
- Under-insuring to save on premiums
- Buying insurance as an investment (except ULIPs)
- Not reviewing coverage periodically
- Not disclosing medical history (can lead to claim rejection)
- Ignoring health insurance thinking employer covers it
Tax Benefits
Life insurance premiums: Section 80C (up to ₹1.5L). Health insurance premiums: Section 80D (₹25K for self/family, ₹50K for parents 60+). These tax benefits make insurance more affordable.
How much term insurance do you need?
A common rule is 10–15 times your annual income. So if you earn ₹10 lakh per year, consider ₹1–1.5 crore term cover. Add outstanding loans (home, personal, education) and subtract existing investments and other life cover. The idea is that if something were to happen to you, your family could pay off debts and have enough to maintain their lifestyle and meet future goals like children's education. Use our term insurance calculator to input your income, debts, and dependents to get a recommended coverage amount. Buy term early; premium rises sharply with age.
How much health coverage is enough?
Medical costs in India have risen sharply; a major surgery or ICU stay can cost ₹5–15 lakh or more in a good hospital. For a family of four in a metro, ₹10–20 lakh base coverage is often recommended, with a top-up or super top-up for higher sums at lower cost. Consider your family's age, medical history, and city (metro costs are higher). Employer group insurance is useful but usually not enough on its own; have a personal or family floater policy so coverage continues even if you change jobs. Our health insurance calculator helps you estimate the right sum insured based on these factors.
Term vs whole life vs ULIP: Which to choose
Term insurance is pure protection: you pay a premium and your family gets a lump sum if you die during the term. It is the most affordable way to get high coverage. Whole life and endowment policies combine insurance with savings but have higher premiums and lower coverage per rupee of premium. ULIPs mix insurance with equity/debt investment; they are more complex and suit only those who understand market risk and long-term commitment. For most people, the best approach is to buy adequate term insurance first and invest separately in mutual funds or other instruments for wealth creation.
When to buy insurance: Start early
Term and health insurance get costlier as you age and as health issues appear. Buying in your 20s or early 30s locks in lower premiums for the same coverage. For health insurance, pre-existing conditions can lead to waiting periods or exclusions if you buy late. So even if you have employer cover, consider a personal term plan and a base health policy when you are young and healthy. You can increase coverage later with top-ups or additional policies as your income and family size grow.
Claim process and documents
For term insurance death claims, the nominee needs to submit the claim form, death certificate, policy document, and identity proof. The insurer may ask for medical records or a police report in case of accidental death. For health insurance, you need to inform the insurer or use cashless at a network hospital; keep all bills and reports. Disclose all facts at the time of buying; non-disclosure can lead to claim rejection. Keep policy documents and premium payment proof in a place your family can access.
Using Our Calculators
Use our Term Insurance Calculator to determine life coverage and Health Insurance Calculator for health coverage. Both provide personalized recommendations based on your specific needs and circumstances.