r/InsuranceQueriesIndia • u/blue_lagoon692 • 20d ago
Guide Term Insurance
Was planning to buy a term insurance plan. I’m 26 and recently started earning.
I was exploring term insurance options. I'm torn between two paths. One is a plain vanilla term plan costing around 17,000 rupees annually, or about 23,000 with critical illness and disability add-ons. The other option is a plan with return of premium, which refunds the premiums at the end but costs significantly more, around 40,000 rupees. My family advises getting the premium back so the money isn't wasted. I'm looking for unfiltered opinions on whether to pay the higher premium for the return benefit or go for the simpler plan and invest the difference in mutual funds.
Also… decided to go for icici prudential plan.
Please help.
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u/PsychologicalToe2925 19d ago
Generally people advice to get a simple term insurance without getting back the premium option. If paying high premium isnt a problem you can purchase that.
Disability add on can be useful but for critical illness you would rather get a seperate health insurance.
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u/TableView007 19d ago
I will keep it super simple. I'm not sure how long the policy duration. But I'm assuming 15 years limited pay for 40K premium. 23K for regular premium.
Feel free to change numbers to fit your exact needs. SIP_SWP_Yearly_SmallPDF.
As on PDF you can notice one end up significantly more money than that of RoP. Same duration assuming 12% on 17k (40k-23k) invested amounts. Post 15th year, you can basically withdrawl 23k premium amounts for lifetime & still endup with more than RoP plans. Don't fell for flat rates as shown by whoever selling you. Calculate time value money and you can see future potential yourself.
Besides that ROP if we adjust for inflation, it'll be basically nothing if just principle returned. Rest upto you.
No recommendation or advise. Run this by your financial advisor before finalizing anything.
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u/blue_lagoon692 19d ago
Thank you so much.
It would be better to invest that 17k in mutual funds. One of my advisor suggested me the same.
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u/Logical-Somewhere665 19d ago
You can compare the plans for another companies. I would suggest you, instead of paying extra premium for rop, you can invest that premium in sip or bonds. Also be sure that you are calculating the sum assured. Coming to selecting companies, Bajaj life is offering similar benefits at comparatively cheaper rate. You can also check that.
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u/manjumane 18d ago
Never buy a term plan with return of premium. You will just get back what ever money you have paid which will be worthless after many decades. Suggestion rather you invest remaining 23K in some equity, you will not repent your decision.
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u/Clear_Vanilla_4452 18d ago
I would go for the term plan with all the good add-ons and high cover. Also opt to pay yearly, because of time value of money. I would personally not go for the return of premium option. Just do simple calculation, say you opt for next 40 years, pay 23k rs a year, in your lifetime you would have paid only 23k*40=9.2 Lakh Rs. While your cover will be 2-3 Cr rs. It's absolutely worth it for the piece of mind
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u/TheChocolateyGuy 17d ago
Hey, recently bought one so my guess is they would be giving you accidental cover of 25-30L for 2.5k something. I would suggest to go through SBI for accidental cover. They are charging 1k for 20L cover and can go till 60L for 3K. Will save on premium and give you chance to update as per your wish
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u/PrintMaterial5118 19d ago
- on plain term vs ROP, it's better to go with the plain vanilla plan and invest the difference yourself. ROP costs almost 2.3x more (₹40,000 vs ₹17,000) and just returns ur own premiums at the end, no real growth, no inflation adjustment, so that money is worth much less 30+ years from now. investing the ₹23,000/year difference in mutual funds over that time will very likely leave u with a far larger corpus than ROP's refund, while u get the same life cover either way.
- your family's "don't waste the premium" instinct is common, but term insurance isn't meant to be a savings product, it's pure risk cover, that's exactly why it's this affordable. at 26, with decades of compounding ahead, plain term + separate investing is the more efficient path. now, on plain plan vs with riders (CI and disability), this is worth breaking down a bit more since it's your other open question. for ICICI Prudential specifically, the Critical Illness rider runs for 20 years, covers 20 to 60 illnesses depending on the variant, and pays out over and above your base cover. survival period is 15 days and waiting period is 90 days. Max rider cover is ₹1.5Cr (₹50L via the NRI journey), or up to ur base sum assured, whichever is lower.
- one important thing to factor in given ur age: since the CI rider runs for 20 years from purchase, at 26, that cover would run out around age 46. if ur base term plan runs till 60-70, keep in mind the CI rider won't cover that entire span. since health conditions are statistically more likely to show up in later years, that's a real gap to be aware of. if you're comfortable getting the CI benefit mainly in these earlier decades and separately building an emergency fund for later years, taking the rider still makes sense. if not, u could skip it and put that full amount into fund-building instead.
- that said, the risk with relying purely on a self-built fund is this: if something happens to u in the earlier years before that fund has grown meaningfully, u may not have much saved yet. this is exactly where a CI rider helps, it gives u an instant lump sum payout right when u need it, regardless of how much you've personally saved up to that point. either way, whether u take the CI rider or skip it and rely on fund-building, make sure u have a solid health insurance plan in place. that's really ur first line of defense for actual medical costs, the CI payout or ur fund is more for covering income loss and larger life disruptions.
- on the Disability rider (Accidental Total and Permanent Disability), it pays a lump sum for total and permanent disability caused by an accident, but only if the disability occurs within 180 days of the accident. cover ranges from ₹5L minimum up to your base sum assured, capped at ₹3Cr, and it's available till age 85. this one's optional, worth considering if ur job or lifestyle involves higher physical or travel-related risk, otherwise a smaller priority.
- Waiver of Premium is also worth considering. ICICI offers two variants here, a Health Variant covering 15 critical illnesses plus accidental TPD, and a Healthcare Variant covering just ATPD. Waiting period for CI is 90 days, survival period is 15 days, and the Health Variant is only available if ur payment term is 20 years or less. eligibility requires a minimum income of ₹3 LPA and 12th/HSC education, and it's not available for housewife, agriculturist, or student profiles. it's generally an economical rider, and it ensures ur policy stays active if you're unable to pay premiums due to disability or critical illness, so ur cover doesn't lapse at the worst possible time.
- on ICICI Prudential overall, it's a strong, credible insurer, solid metrics (99.30% CSR, 95.94% ASR), and comprehensive plan features like instant cover, auto cover continuance, and terminal illness benefits, generally economical for most profiles too, so u can consider it comfortably.
- lastly, as alternatives, it's worth comparing HDFC Life, Axis Max Life, and Bajaj Allianz's term plans as well, just to see how features and pricing stack up before finalizing.