6 Things to Check Before Buying ₹1 Crore Term Insurance
A ₹1 crore cover looks generous on paper. Once EMIs, school fees and daily expenses are counted over 15 to 20 years, it may turn out to be less than your family needs. Claim payment is usually not the problem. The IRDAI Handbook on Indian Insurance Statistics 2024-25 shows that life insurers paid 97.82% of individual death claims by number. What matters more is whether the policy suits your family’s needs. Here are six things to check before buying a term insurance policy of ₹ 1 crore.
1. Check If ₹1 Crore Is Enough After Inflation
Start with a simple question: how much would your family need without your income? Add up the household expenses for the years they would depend on you, any loans you owe, and goals such as your child's education. Then subtract your existing savings and investments.
Inflation matters here. If prices rise by 6% a year, which is only an assumption, ₹1 crore after 20 years will buy what about ₹31 lakh buys today. Here is an illustrative example -
In this case, a ₹1 crore term insurance leaves a ₹20 lakh gap. You can test your own numbers with the life insurance calculator.
2. Match the Policy Term to Your Responsibilities
Term insurance pays only if you pass away during the policy term. So the term should outlast your biggest responsibilities. Many people choose cover until retirement. A safer approach is to cover the years until loans are repaid and children are independent. Some plans also offer cover up to age 99 or 100.
Also look at the premium payment term. Paying regularly over the full term keeps the yearly premium lower than limited pay. Annual payment costs less overall than monthly, quarterly or half-yearly payments, which carry a loading. Buying early helps too, because your premium depends on your age when you start.
3. Look Beyond the Claim Settlement Ratio
The claim settlement ratio shows the share of death claims an insurer settled in a year. A high CSR is reassuring, but you should read it carefully. Check how CSR has moved over several years, not just the last year's ratio. Also check whether it is calculated by number of claims or by claim amount. You can also verify what insurers advertise from IRDAI's Handbook, which publishes insurer-wise individual death claim data.
Financial strength matters as well. The solvency ratio shows whether an insurer has enough capital to meet its obligations & IRDAI mandates a minimum of 150% for life insurers. So check both of these aspects before finalising.
4. Compare Premium, Tax Benefits & Total Cost
Premium depends on your age, gender, health, smoking habits, occupation and policy term. So compare plans on the same terms: the same cover, the same term and the same smoker status. A headline price such as ₹14 a day, which works out to about ₹5,110 a year, is a starting point. Your own quote may differ.
Check the tax angle too. As per prevailing tax laws, premiums can qualify for a deduction of up to ₹1.5 lakh under Section 80C, but only under the old tax regime. The death benefit your nominee receives is generally tax-free under Section 10( 10D ). Confirm your situation with a tax adviser before relying on either benefit.
5. Be Ready for Medical Tests and Disclose Everything
Most 1 crore term plans ask for medical tests because the cover is large. The tests depend on your age, health & the sum assured. They help the insurer price your policy fairly.
Be honest on the proposal form. Mention smoking, drinking, existing conditions, family medical history, your occupation and any other policies you hold. An insurer can question a life policy only within three years of issue under Section 45 of the Insurance Act 1938, commencement of risk or revival. In that window, hiding a material fact can lead to a rejected claim. Accurate disclosure can help you avoid any complications in the future.
6. Read the Exclusions, Payout Options & Nominee Details
Every policy lists situations in which the insurer is not liable to pay any amount. A common example of this is death by suicide during an initial period after the policy starts. Before you finalise anything, read the full exclusion list in the policy document.
Next, look at how the money reaches your family. The death benefit can be recieved as a lump sum, in instalments or as a mix of both. A lump sum can clear loans quickly, while monthly instalments can replace your salary over time. Finally, name your nominee correctly and update the details after marriage or the birth of a child.
Conclusion
Choosing 1 crore term insurance is about how well the policy fits your family's life. Once you know your cover, term and budget, you should compare plans on claim record & flexibility not just the price. Finally, finding the right policy comes down to securing genuine peace of mind for your loved ones without stretching your finances. If you want to check out flexible coverage options & term insurance calculators, you can look into providers like Bajaj Life Insurance.
