Understand the types of insurance, what they cover, and why you need them.
The Golden Rule
Insurance is not an investment — it is protection. Buy the right cover first, then invest the rest. Never mix insurance with investment unless you fully understand the product.
Pure life cover for a fixed term. Pays the sum assured to your nominee if you pass away during the policy period. No maturity benefit — premiums are low because the insurer only pays on death.
Key Benefits
Pro Tip
Rule of thumb: Cover = 10–15× your annual income. Buy early — premiums rise with age and health issues.
Covers hospitalisation, surgery, and medical expenses. Can be individual, family floater, or top-up. Cashless treatment at network hospitals or reimbursement for others.
Key Benefits
Pro Tip
A family floater is cost-efficient but check the age limit. Add a super top-up for high medical inflation.
Combines life cover with savings or market-linked investment (ULIP). Pays a maturity benefit if you survive the term, or a death benefit to nominees. Higher premiums than term plans.
Key Benefits
Pro Tip
* Tax-free only if annual premium ≤ ₹5L (for ULIPs post Apr 2023). Prefer term + mutual fund over endowment for pure wealth creation.
Lump-sum payout on diagnosis of specified critical illnesses (heart attack, cancer, stroke, kidney failure, etc.). Payout is irrespective of actual medical bills — you can use it for treatment, EMIs, or lost income.
Key Benefits
Pro Tip
Check the waiting period (usually 90 days) and survival clause (usually 30 days post-diagnosis) before buying.
Term Life
10–15× annual income
minimum recommended
Health
₹5L–₹10L
family floater base; add super top-up
Critical Illness
₹25L–₹50L
covers income loss during recovery
| Type | Section | Limit |
|---|---|---|
| Term / Life premium | 80C | ₹1,50,000 p.a. |
| Health premium (self) | 80D | ₹25,000 p.a. |
| Health premium (senior parent) | 80D | ₹50,000 p.a. |
| Critical Illness premium | 80D | Within 80D limit |
| Life / ULIP maturity | 10(10D) | Tax-free (conditions apply) |