Term Insurance Plans for High Net-Worth Individuals (HNIs) in India?

A few days ago, we at Ditto had a unique experience. The story started like this - 

A client booked a free consultation call with us. Now, this was a week when one of our co-founders was also taking calls (yes, they do that! They like to remind themselves about how they started!). Our new client’s call got booked with our co-founder, and the client had a simple question - 

“Hi. I am Anisha. Recently, I have seen many social media posts about life insurance and term insurance policies. But I am a bit confused about whether I should take this. I work in an XYZ company as the Head of the Product team, have an annual CTC of ₹25 lakhs, and have my parents (senior citizens), a spouse (who earns ₹30 lakhs annually), and two children (4 years each) to look after. Do you still think I need a term insurance plan despite the package I have?”

To be fair, until then, our co-founder hadn’t disclosed his identity! Now, he said, “I am the co-founder of this company and yet have a term insurance plan. Let me tell you why I need it!”

(P.S. Co-founder rocked, client shocked!)

Read on to find out what he told the client about why term insurance plans for High Net Worth Individuals (HNIs) in India are so popular! 

Heads up! We know that life insurance can be overwhelming – but it doesn’t have to! Our IRDAI-certified advisors at Ditto assess your requirements and can help you pick the right policy. And the best part? We don’t spam or pressure you to buy.

Who are High Net-Worth Individuals (HNIs) in India?

High Net-Worth Individuals (HNIs) in India are individuals who have significant wealth that can be reflected in their investable assets (the worth/value threshold varies). These assets can comprise bonds/ cash/equities/mutual funds/real estate, etc. 

HNIs are majorly characterised by - 

1. Luxury lifestyle: Considering the high-value assets and the significant wealth possessed, the High Net Worth Individuals (HNIs) in India are often characterised by their luxurious lifestyle. From luxurious cars, exclusive memberships, international travel records, expensive real estate, and more - HNIs usually have all or at least some of these. 
2. Investable assets: HNIs don’t just hold substantial wealth; they usually possess significant assets that can be easily liquidated. These assets can be bonds/ cash/equities/mutual funds/real estate, etc.
3. Income and wealth: HNIs are usually associated with high-paying professions, successful business ventures or inherited wealth. Additionally, their financial portfolios are diversified.
4. Sophisticated financial requirements: Considering the kind of wealth that HNIs are associated with, they require customised and 1-1 support from financial experts. Thus, they usually deal with customised investment strategies, private banking, private bankers, specialised wealth management services, wealth managers, tax advisors, and estate planning.  
5. Donations or more: Most of the HNIs are involved in donations to charities associated with education, poverty, old age homes, etc. 

Why Do High Net-Worth Individuals (HNIs) in India Need Term Insurance Plans?

HNis, as the name suggests, are associated with high-value wealth and investable assets. However, this does not bar them from the ‘need’ to purchase term insurance policies since term insurance policies are not about acquiring wealth and maintaining a luxurious lifestyle (that can be catered to by the liquidation of the investable assets left behind by an HNI). 

Here’s a quick look at some of the reasons why High Net Worth Individuals (HNIs) in India need term insurance policies - 

1. Shield against financial liabilities: As HNIs, you might have a sizeable wealth. However, this doesn’t mean that there aren’t debts involved - for business, real estate purchase, and/or other ventures. Under such circumstances, the last thing that you want is for your family to spend your accumulated wealth to resolve such debts. 

On the other hand, with a comprehensive term insurance policy in place, in the event of your unfortunate absence, the sum assured will be adequate to cater to the entire debt. (This is provided that you have calculated the ideal sum assured for your family.) 

2. Affordable access to sizeable coverage at 0 risks: Now, we get it - as HNIs, you have a substantial wealth on your end. However, inexpensive access to a considerable sum assured at 0 risk is always a welcome gesture, mainly if this amount can serve as an income replacement if your unfortunate passing away. 

Additionally, a particular share of your wealth might be tied up in investment channels with some risks on their returns since they are market-linked. Under such circumstances, you would want to ensure that you have a substantial amount set aside that might not fetch you any additional returns but will not undergo any deductions (death benefits received from term insurance policies come with tax benefits - discussed below). Such a financial safety net will kick in in the event of your death and help your family with their future financial goals across any life stage events or any “run of the mill” monthly expenses. 

3. Smooth income replacement opportunity: Since your annual earnings are most likely above 15-20 lakhs, in the case of your sudden and unfortunate absence, the financial gap created due to a compromised source of income can be quite a disaster for your family. They will be left dealing with the emotional loss created by the death of a family member and the subsequent unbearable financial burden. 

On the other hand, say you have opted for a term insurance policy with 

• Adequate sum assured 
• Optimum term insurance riders 

-the insurer will 

• Take into account your income slab, 
• Use a suitable multiplier to get the ideal cover amount and 
• If something fatal (or diagnosis of a terminal ailment/critical illness/ an accident that leads to death or total and permanent disability) happens, 

-this amount will kick in, and your income will be financially replicated even in your absence. 

4. Wealth Preservation: In the case of High Net Worth Individuals, there is a major and unique aspect to be considered - the preservation of wealth that is passed on to future generations as a legacy. 

While this stands true for individuals of all income slabs, for HNIs, the amount to be passed on is sizeable and hence needs specific mention. The last thing that you (as HNIs) would want is for your legacy to depreciate to cater to various requirements in case something unfortunate happens to you. 

Safeguarding your life’s savings means ensuring that every other aspect of your and your family’s life is well shielded. This can be well achieved via an optimum term insurance policy. All that you need to do is reach out to an IRDAI-certified insurance advisor and seek their help. They will calculate all your income channels and evaluate the approximate value. Based on this and by calculating your existing financial liabilities, they will help you with the best possible term insurance cover amount that would be the best financial blanket for - 

- Your personal financial goals

- Your family’s future financial requirements 

- Your business financial requirements 

5. Business continuance: As HNIs, your business capital will be substantial, nothing like the run-of-the-mill entrepreneurs. Quite naturally, following up with this business in the event of your unfortunate absence will be massively taxing in terms of the financial aspect. Subsequently, your family might need to decide between either compromising their lifestyle and financial life stage goals or downsizing your business (which, in a domino effect, will impact the profits and hence their future financial goals). 

To avoid such situations, availing of a term insurance plan is ideal. The death benefit (if calculated accurately) received by the beneficiaries can cater to the business requirements of rolling in cash to keep the operations going without a hiccup. This also ensures that your family won’t need to water down its savings to maintain the business.  

Now, the ones mentioned above are just some of the benefits of term insurance plans. Apart from the ones that speak only to the High Net Worth Individuals of India, here is a quick look at some of the general perks of purchasing term insurance policies - 

1. Tax benefits: When you purchase a term insurance plan, the premium to be paid can be claimed as tax deductions under Section 80C. The total deductions under this Section are capped at ₹1.5 lakhs. 
2. Ample customisation options: in its vanilla form, term insurance plans are not really flexible. Since term insurance plans involve a substantial amount to be disbursed as a death benefit, term insurance providers are not exactly lenient. However, if you are looking to customise your term insurance policy, you just need to opt for a suitable plan that comes with a variety of term insurance riders. Here is a look at some of the top term insurance riders

• Critical illness rider 
• Waiver of premium rider
• Total and permanent disability rider
• Increasing cover 
• Decreasing cover 
• Zero cost options 
• Return of premium riders 
• Terminal illness (although this often comes as an in-built perk)
• Life Stage Benefit rider and more 

How to Choose the Best Term Insurance Plans for High Net-Worth Individuals (HNIs) in India?

1. Approach a credible insurer 

• Claim Settlement Ratio (CSR): The Claim Settlement Ratio (CSR) of a life insurance provider is an important indicator of its reliability. It helps you assess how well the insurer handles claims. The CSR is calculated by dividing the total number of claims settled in a year by the total number of claims filed during the same period, then multiplying by 100.

If the insurer you're considering has a CSR of 97 or higher (but not over 100), it's a positive sign. This is the ideal benchmark for a trustworthy life insurance provider. However, remember, you shouldn’t base your decision solely on the CSR. There are other factors you need to take into account before choosing an insurer.

Here is a quick look at the CSR of the life insurance providers in the industry - 

• Complaint Volume: When you're buying a term insurance plan, it's important to consider the number of complaints an insurer receives. Most complaints are usually about difficulties with claim settlements or delays in the process. By checking the complaint volume, you can get a better sense of how efficiently the insurer operates overall.

The lower the complaint volume (per 10,000 claims), the better the insurer is. Here is a quick look at the complaint volume of the life insurance providers in the industry - 

• Annual Average Business Income: The average annual business volume of a term insurance provider isn't necessarily a direct measure of its credibility, but it can give you some insight into the insurer's track record. By looking at these numbers, you can get a sense of whether the insurer is a small, medium, or large company. This can help you make a more informed decision about whether or not to consider this provider for your life insurance needs.

Additionally, in the case of HNIs, considering that you will be opting for a higher sum assured, it would make much sense to approach an established insurer that guarantees sufficient funds and liquidity. 

Here is a quick look at the Annual Average Business Income of the life insurance providers in the industry - 

2. Ensure that your chosen term insurance policy for High Net-Worth Individuals (HNIs) has these features - 

• Optimum sum assured: In general, term insurance policies always involve a sizeable coverage, considering that these policies are crafted to act as income replacement tools in the event of the policyholder's death/permanent disability leading to a compromised source of income. 

However, in the case of High Net Worth Individuals or HNIs, the cover amount needs to be much higher considering their HLVs (Human Life Values). Thus, when looking for a term insurance plan for HNIs, it is important that you shortlist a policy with no upper limit on the sum assured. 

• The right combination of riders: When you choose a term insurance plan for HNIs with substantial coverage, you are already looking at a pretty high premium (which is extremely rare, considering that term insurance plans are usually affordable). The least you can do is ensure that the term insurance riders you choose are actually adding value to your plan. As HNIs, a few term insurance riders that you can go ahead with are - 

a. Waiver of Premium: Since the premiums are pretty high, it might be the best possible decision to go with this rider since it will waive any future premiums (especially since they will be on the high end, thanks to the high cover amount) in case you are left permanently disabled or are diagnosed with any of the listed critical ailments. Since such circumstances mean that you are looking at a compromised source of income, waivered premiums for an active-term insurance policy can be quite profitable. 

b. Accidental Total and Permanent Rider: If you have an accident and are left permanently incapacitated, the insurer will offer you an amount on a monthly or lump sum basis. This amount so received can be used to conduct one’s day-to-day operations/requirements. As an HNI with a business to run and a family to take care of (as per the preset lifestyle requirements), such an amount might prove to be handy. 

c. Critical Illness Rider: In case the insured is diagnosed with any of the listed critical ailments, he/she will receive a lump sum amount that can be used at their discretion. You can use it to take care of business loans, get help with advanced treatments from renowned specialists, or build another fund for your spouse/children. 

• Flexibility in premium payment options: Considering that you will be seeking a high sum assured to cater to your diverse and high financial requirements, the premiums will definitely be higher than the standard cases. Under such circumstances, you would want to have multiple options available for the mode of payment - regular, limited, and one-time. This will help you schedule your payments as per your financial bandwidth and availability of funds. 

What are the Top Term Insurance Plans for High Net-Worth Individuals (HNIs) in India?

1. HDFC Life Click2Protect Elite: This is an exclusive plan from the stable of HDFC Ergo that has a minimum coverage of ₹2 crores. Among its list of features are - surrender options, smart exit benefits, standard death benefits, and riders like - 
2. Income Benefit on Accidental Disability Rider
3. Critical Illness Plus Rider 
4. Protect Plus Rider 
5. Health Plus Rider 

Drawbacks: The HDFC Life Click2Protect Elite policy only offers a limited pay option for 10 or 15 years. The absence of a regular mode of payment and more options across its limited payment mode is highly restrictive and not what you would expect from a plan that is supposed to cater to the elite section of society. 

2. TATA AIA Maha Raksha Supreme Select: This plan from TATA AIA is comparatively affordable and comes with some exclusive features and a long list of the basic features that should be expected from any top-notch term insurance policy. Among its list of riders are the following - 

• Critical Illness rider 
• Accidental Death Benefit 
• Waiver of premium in the case of critical ailment or accidental permanent and total disability 
• Total permanent disability rider (complete payout of the base sum assured)

Drawbacks: The plan lacks a feature to up your cover based on inflation and the Zero Cost option. 

Now, while we have mentioned the two niche term insurance products, here is something that you should remember - 

In the case of term insurance plans, even if you go with the best term insurance plans (not the niche ones) and locate a plan that comes with no upper limit on its sum assured, you are good to go. Here’s why - 

a. Niche plans may often offer you a higher premium while still restricting you in the case of certain features. 

b. All term insurance plans assign you coverage based on their multiplier. This is generally the same for all plans, and you don’t really need a niche policy for this, rather, you need a plan with no cap on its sum assured. (Here is a quick look at the multiplier table.)

Thus, if you don’t lean towards either of the 2 term insurance plans for High Net Worth Individuals in India, here is a look at the all-time best term insurance policies across the industry for 2025. 

What are the Top Term Insurance Policies in India?

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Conclusion 

As HNIs, term insurance policies are crucial. However, since the sum assured is sizeable in your case, it is important that you make an informed decision about this essential financial tool. Make sure that the income replacement tool you pick is from the best term insurer and that the plan comprises the essential features that would specifically cater to your customised requirements.