This article is short on purpose. The deep-dive on picking, buying, and comparing term insurance lives on nyvo.in/term-insurance. What you need from this article is the mental model.
The 60-second truth
Term insurance is pure protection. If you die during the term, your family gets a fixed payout. If you don't, the premium is gone. It's cheap.
Whole-life / endowment / ULIP is protection bundled with an investment component. Premiums are 5–20× higher. The "investment" inside these policies typically returns 4–6% per year – worse than a plain FD.
For everyone under 60 with financial dependents: buy term. Invest separately.
Why investors specifically need to hear this
You already invest in mutual funds. You understand 12% equity returns and compounding. The last thing you should be doing is locking money into a 4% insurance-investment hybrid that's hard to exit.
"Buy term, invest the rest" is the advice. It's been the advice for 50 years. The "rest" you invest will vastly outpace anything an insurance company can do with your money.
Minimum rules of thumb
- Sum assured: 15–20× your annual income.
- Term: Until age 60–65 (when dependents are grown or retirement corpus is built).
- Type: Plain term. No return-of-premium. No "whole life" riders. Keep it simple.
- Medical tests: Do them. Lower premiums than skipping, and ensures no claim disputes.
- Disclose everything. Smoking, medical history, family history. Lies invalidate claims.
When whole-life MIGHT make sense
Three edge cases:
- Estate planning for HNI individuals with specific tax/succession goals – very narrow use case.
- Extremely conservative savers who would otherwise keep all money in FDs – even then, PPF beats endowment.
- Mandatory employer policy (no choice).
Outside these, whole-life products are almost always net-negative versus term + MF.
The ULIP trap specifically
A ULIP ties insurance to mutual funds. Fees are hidden in 4–5 different line items. Surrender in the first 5 years costs you. The insurance component is under-sized. The MF component is over-priced.
If someone sold you a ULIP and you've held it for < 5 years: check surrender charges, consider exiting, redirect premium to term + direct MF.
If you've held it for 10+ years: the fees are mostly paid. Usually easier to keep it going than exit.
The full guide is on nyvo.in
Picking the right term plan – comparing HDFC Click2Protect, ICICI iProtect, Max Life, LIC – with rider analysis, medical test walkthroughs, claim settlement ratio reality-check, all lives on the NYVO Insurance site.
Action list
- If you don't have term cover: buy it this month.
- If you have a ULIP or endowment: evaluate surrender vs hold.
- If you have term but less than 15× income: top up.
- Read the full term guide on nyvo.in before you actually buy.
Need unbiased help picking between the 2–3 shortlisted plans? That's what our sister site nyvo.in – NYVO Insurance – is for.
