5 Crore Term Insurance Plans: Are They Worth It?

When it comes to term insurance policies, you are seeking a financial product that will act as your income replacement and offer respite to your family in the event of your unfortunate absence. The sum assured (death benefit) is crafted to help your family achieve life-stage goals without any financial hurdles in your absence.

Hence, it is prudent to customise the sum assured (which you choose during policy purchase) to your financial goals and requirements. Such customisation will help you cater to your tailored financial requirements. Take a look at the free calculator to compute your ideal sum assured (requires your age, term insurance policy tenure, monthly expenses, and outstanding loan), and you can gain an insight into your ideal cover amount.

Now, say, for example, this ideal sum assured comes to a whooping ₹5 crore. Your next question may be, “Do I really need a ₹5 crore coverage? Is it worth it? What are the best term insurance plans offering these ₹5 crore coverage? And what is the estimated premium I will be paying?”

If that’s the case, this article on ₹5 crore term insurance plans is for you!

Best Term Insurance Plans Offering 5 Crore Coverage in India

Heads Up: It takes an average person up to 5 hours to read & analyze a term life policy, and 10 hours or more to compare different plans and make a decision.

This is why we propose a better alternative - taking a 30-minute FREE consultation with Ditto’s certified advisors. We have a spam-free guarantee, and we’ll never push you to buy a plan. Don’t delay this - we have limited slots every day, so book a quick call here before they run out.

(The case in the study is a 38-year-old, non-smoking male with a term insurance plan til he turns 65. His annual income is ₹35 lakhs.)

Do You Need A ₹5 Crore Coverage for Your Term Insurance Policy?

As stated before, there is no “one size fits all” in term insurance policies, as far as the cover amount is concerned. Let’s take a few examples to understand this better.

A slight change in either the age, the tenure, the monthly expenses or even if we would have changed the outstanding loan amount results in a substantial change in your ideal term insurance cover. The calculation also takes into account the inflation rate.

(Please note: A few more criteria must be considered when the actual ideal sum assured is calculated. That includes your educational qualification, income slab, profession, habits, lifestyle, and current financial bandwidth.)

So, to answer your question about whether you need ₹5 crore coverage for your term insurance policy: YES, you may. Based on the criteria mentioned above, if your family’s future financials tend towards this and your income slab enables it, the underwriting team of an insurer may also approve of this amount. However, since the amount is higher than the standard ₹1 crore or ₹ 2 crore term insurance plans, you need to expect some exclusive restrictions/limitations.

Things To Remember When Purchasing a ₹5 Crore Coverage for Your Term Insurance Policy

#1. Educational, Income Slab, and Salaried/Non-Salaried as Eligibility Criteria: Generally, term insurance providers are strict about their eligibility criteria. However, they offer you a term insurance plan if you have passed your Class 12th (your last educational qualification). Although it differs from one insurer to another, and there might be a capping on the maximum sum assured offered -

(this is just an attempt to explain how the eligibility criteria function. For this example, we have picked the 3 most popular term insurance providers - ICICI Prudential, Max Life, and HDFC Life.)

On the other hand, when it comes to availing of a ₹5 crore term insurance policy,

• The minimum income has to be either more or equal to ₹20 lakhs/annum.
• In terms of age and income qualification, a potential policyholder can be eligible for a ₹5 crore coverage only if that fits the income multiplier calculations -

So, if a 37-year-old with an annual income of ₹30 lakhs applies for a ₹5 crore coverage (₹30 lakhs * 20 = ₹6 crores), he may avail of it (provided that all the other eligibility criteria are met), as per the decision of the underwriting team

#2. Pincode Restrictions: Have you heard about negative pin codes? So, these are cities that some insurance providers have highlighted. These cities usually have a very high crime rate, environmental hazards, or poor healthcare facilities.

While some insurers like ICICI Prudential and Max Life will deny your applications for coverage (irrespective of your required sum assured) if you belong to a city with a negative Pincode, other insurers might just allow it. It all depends on the insurer and its underwriting team.

What are the Best Term Insurance Policies Offering ₹5 Crore Coverage in India?

1. Max Life Smart Total Elite Protection: Much like Max Life’s Smart Secure Plus policy, this plan too is comprehensive and rarely has any caveats. The policy is a slightly tweaked version of the Smart Secure plan, wherein the plan offers an additional Smart Exit Option. Apart from this, the plan offers a variety of riders -

• Waiver of Premium (due to accident or critical illness)
• Total and Permanent Disability rider
• Critical Illness benefit (64 and 22 ailments)
• Accidental Death Benefit
• Zero Cost Option, and more.

Drawbacks: The plan requires its policyholders to have a minimum annual income of ₹10 lakhs per annum (which is okay considering you need a minimum of ₹20 lakhs/annum to avail of a ₹5 crore coverage) and offers north of ₹2 crores.

2. HDFC Click2Protect Super: HDFC Life offers a few variants of its Click2Protect product, and almost all of them are a tad bit expensive compared to the other plans in the market. However, Click2ProtectSuper is the priciest of all these variants. However, the plan's features are lucrative enough to justify its slightly higher premiums.

In terms of riders, the policy offers some of the best in the industry:

• Waiver of Premium on Critical Illness
• Spouse Cover Option
• Return of Premium
• Waiver of Premium on Total and Permanent Disability
• Renewability Option at Maturity
• Life Stage Option

The policy also offers a smart exit perk with an in-built terminal illness benefit and has 3 variants:

• Life: The assured sum is paid out as a lump upon the policyholder’s death. It includes a terminal illness benefit, where the sum assured is paid out once the policyholder is diagnosed with a terminal ailment and has only a few months to live (less than 6 months).
• Life Plus: This variant offers an accidental death benefit in addition to the death and terminal illness benefits. If the policyholder dies due to an accident, the nominee receives an additional amount over and above the base sum assured.
• Life Goal: The sum assured payable on death varies with the policy year, determined by the Level Cover Period chosen by the policyholder at the plan's inception.

Drawbacks: As stated before, the plan is slightly more expensive than similar plans from its category (from other insurers).

3. ICICI Prudential iProtect Smart: This is the solo term insurance plan from the stable of ICICI Prudential. The plan is comprehensive, affordable, offers lower rates for smoker portfolios and offers a wide range of features -

• Life Stage Benefit Option (In-Built)
• Waiver of Premium in case of total permanent disability (In-Built)
• Zero Cost Term Plan Option (In-Built)
• Maturity benefits in the form of premium returns (rider)
• Accidental Death Benefit (Rider)
• Critical Illness Benefit (Rider)

Drawbacks: The plan excludes riders for total and permanent disability and has no accelerated options for its critical illness benefit. Additionally, the insurer’s recent dip in operational metrics has become a concern.

4. Bajaj Life eTouch: This is one of the most affordable term insurance plans available in the market. Its widespread popularity can be attributed to its features, including -

• Three variants: Life Shield, Life Shield Plus, and Life Shield Return of Premium.
• Depending on the chosen variant, you have a list of riders (death benefits, terminal illness, waiver of premium, accidental death benefit rider, and return of premiums)

Drawbacks: The plan lacks a Critical Illness Rider.

5. Tata AIA Maha Raksha Supreme: One of the most affordable term insurance plans in the market, the Maha Raksha Supreme policy offers quite an extensive list of features -

• Critical Illness Benefit (40 ailments)
• Accidental Death Benefit
• Waiver of Premiums in the case of accidental total and permanent disability and the diagnosis of a critical illness,
• Critical Illness Rider,
• Total Permanent Disability Rider

Drawbacks: The plan is only offered to those with an annual income of more than ₹15 lakhs/annum (that isn’t a hindrance considering you are seeking a ₹5 crore coverage requiring a minimum of ₹20 lakhs/annum) and offers coverage equal to or more than ₹2 crores.

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Conclusion

Since you are attempting to avail of a term insurance plan with ₹5 crore average, we suggest you shop around a bit. Preferably compare term insurance policies using a free tool and contact expert advisors. This will ensure that the ₹5 crore term insurance policy you are about to purchase is worth every penny!