₹1 Cr Term Insurance Plan
Introduction
₹1 Crore term plans are term insurance policies that pay out a sum of ₹1 Crore to the nominees if the policyholder passes away. These term plans are reasonably comprehensive considering the ₹1 Crore cover can offer dependents decent protection even in the absence of the primary breadwinner. This money should help sustain the nominees for at least a decade assuming their expenses aren’t exorbitant.
However, we believe that a ₹1 Crore term plan only offers limited protection to individuals whose monthly expenses exceed ₹60,000 and those looking to support their dependents for an extended duration (2-3 decades). So please make sure you to evaluate your coverage needs.
Who should opt for ₹1 crore term insurance?
₹1 crore term insurance plans are excellent options for people under 35 whose monthly expenses don’t exceed ₹30,000 and individuals looking to cover their dependents for no more than 30 years.
Example:
Consider a 30-year-old individual with monthly expenses of ₹30,000 looking to buy a term plan to cover their spouse. In this case, we will need to evaluate what the spouse will need for the foreseeable future in the absence of the primary breadwinner.
Right now, their annual expenses add up to ₹3,60,000. However, they will need roughly ₹16 lakhs annually to maintain the same lifestyle 30 years later, considering inflation. This is shown below:
Current annual expenditure: ₹3,60,000
Projected annual expenditure @5% inflation = 3,60,000 X 1.05^30 = ₹15.6L or ₹16L
A ₹1 crore term plan with a 30-year term will pay out ₹1 crore tax-free if the policyholder dies anytime during the next 3 decades. If the dependents (spouse) were to simply invest the proceeds in a FD (Fixed Deposit), then the principal and the interest would help them cover their expenses for the next 30 years even in the absence of the primary breadwinner.
If you’re unsure how the math works, we have a simple Term Insurance Calculator where you can fill in a few quick fields to get a nearly accurate term cover calculation:
So you can see how a ₹1 Crore term plan will adequately cover the policyholder’s dependents if this scenario holds. However, if the policyholder were to have a child, or borrow money to buy a home, they may need a much larger corpus.
For instance, the same individual with a monthly expense of ₹60,000 can only cover their dependents for 13 years as opposed to 30 years. This may leave their dependents exposed when dealing with additional expenses related to kids or home loans. Meaning, people with monthly expenses beyond ₹30,000 may need protection beyond ₹1 crore.
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Key Features of a ₹1 crore term plan
Most plans that offer a cover of ₹1 crore or more offer features that you would expect to see in a comprehensive term plan:
Alongside death benefits most ₹1 Crore term plans also offer critical illness benefits as an add-on to help you deal with monetary challenges if you are ever diagnosed with a critical illness. So if you were to choose this add-on the insurance company will pay out a fixed sum to deal with any financial obligations you may have. You can use this money to pay your medical bills or you can use them to replace lost income.
Most providers who sell ₹1 Crore term plans also offer a zero-cost option where the insurer will promise to return all your premiums if you forego your policy before maturity, during a period specified by them. So in essence, you get all your premiums back, while also being protected under the term plan.
Top-Up Cover:
₹1 Crore term plans also offer some provision to increase your cover amount in the future if your income were to rise proportionately. This can be in the form of voluntary top-up options or life-stage benefits - where you can increase your coverage as you achieve certain milestones in life.
Most ₹1 Crore term plans also offer a term illness benefit where they promise to pay the full ₹1 Crore if you were ever diagnosed with a terminal illness. In which case, you will receive the full ₹1 Crore even when you’re alive.
A comprehensive plan with a cover of ₹1 crore will also offer to pay off your premiums if you are ever disabled or inflicted with a critical illness.
Note however that most of the benefits are not in-built. You will have to buy them as an add-on by paying a higher premium.
How to Determine the Right Term Insurance Coverage Amount?
There are three key considerations while picking the right cover amount
Current and Future Monthly/Annual Expenses:
To adequately determine what your dependents will need in your absence, you have to consider your current annual expenses and also analyze how they may change in the future. Doing this will involve some rough assessments of how you intend to live your life. You may have to account for children’s expenses, home loans and other unforeseen monetary obligations. Once you do this, you can then calculate the corpus your dependents will need in your absence. You can use our to precisely gauge your coverage needs.
Duration of Coverage:
Most people should be looking to cover their dependents until they turn 60. So for instance somebody who is 25 right now should be looking to buy a term plan that covers their dependents for another 35 years (or in other words, until they turn 60). This extended support will ensure that the dependents will have enough monetary support until they can build a retirement corpus themselves. Alternatively, dependents can also use this money to support their children who in turn may provide for them after the term plan runs its course.
Premiums:
While it may be true that most people need coverage over ₹1 Crore, it is also true that such comprehensive covers come at a significant premium. The objective then becomes to find the right balance between price and coverage. You want to make sure you have meaningful protection without paying a sizeable chunk in premiums. We recommend people talk to a qualified advisor to find the right balance.
If you’d much rather watch a video on how to determine the right term coverage, we highly recommend you check out our podcast episode below:
Benefits of Opting for 1 Crore Term Insurance
Base Protection Layer:
A ₹1 crore term insurance plan offers considerable protection for people with modest expenses (Less than ₹5 lakh). For people with higher annual expenses (₹10 lakhs and above), these plans can offer considerable protection for a decade or so. In many ways, a ₹1 Crore term plan should work as a base protection layer if you are looking to take care of your dependents in your absence.
Low Eligibility Requirements:
Term insurance plans with higher covers come with significant eligibility requirements. You may need to boast an annual income of ₹10 lakh or more. You may need to undergo physical medical examinations. You may even have to provide additional financial information when buying plans with higher covers.
However, most providers do not impose such stringent requirements on people buying a term plan with a cover of ₹1 Crore. In fact, most people under 35 with no pre-existing conditions can buy a ₹1 crore term plan with an annual income of ₹5 lakhs and a simple telemedical (no physical medicals required).
Note that these eligibility requirements may vary between insurers. So we recommend talking to a qualified insurance advisor to pick the most convenient option available for your profile
Affordability:
A ₹1 crore term is extremely affordable if you are buying young. Here’s an example comparing the premiums for a 30-year-old looking to buy a term plan until 60.
| Coverage | For ₹1 Crore | For ₹2 Crores | For ₹3 Crores | For ₹5 Crores |
| Premiums | ₹13,499 | ₹23,414 | ₹33,099 | ₹52,467 |
As you can see, there’s a significant discount in premiums when you buy a ₹1 Crore term plan.
Best ₹1 Crore Term plans, 2024
After reviewing every term plan on the market, we believe these are the top 5 options for people considering buying a term plan with a cover of ₹1 Crore
| Term Plan | Insurer Rating | Product Feature Rating | Premiums | Final Rating | ||
|---|---|---|---|---|---|---|
| Max Life Smart Secure Plus | 4.1 | 4.5 | ₹11,131 | 4 | ||
| ICICI Prudential Iprotect Smart | 4 | 4.3 | ₹12,687 | 3.76 | ||
| HDFC Life Click2Protect Super | 3.8 | 4.4 | ₹13,499 | 3.73 | ||
| Tata AIA Sampoorna Raksha Supreme | 3.9 | 3.8 | ₹11,084 | 3.73 | ||
| Bajaj Allianz Smart Protect Goal | 3.9 | 4.1 | ₹8,979 | 4 | ||
| Note: The premiums have been calculated assuming a 30 year old, non-smoker with no pre-existing conditions buying a term plan until the age of 60. | ||||||
Comparison of Plans Offering 1 crore Term Insurance
To compare and evaluate the best option for you and your dependents, you will need to look at:
The Insurer and their settlement ratios:
It is important to evaluate the insurer to make sure your dependents will have no trouble dealing with claims in your absence. To improve your chances of success it is prudent to look at the insurer’s claim settlement ratio, their amount settlement ratio and their total complaints volume. You can check our “Best Life Insurance Companies” guide to see which insurers top the chart when it comes to term insurance. However, if you want a quick take on the top 5 term insurance companies, here is a list from Ditto’s experts:
Product Features:
While most plans with a ₹1 crore cover offer various add-ons that can be extremely beneficial to consumers, others offer very limited options for people to customize their term plan. This can severely limit the utility of your term plan and also leave your dependents with limited coverage. So ideally, if you are picking a good term plan, you have to make sure that the plan extends robust add-ons that can bump up your overall protection by a sizeable margin.
Premiums:
Premiums and general affordability are perhaps the biggest consideration points for most consumers. While some insurance companies price their ₹1 crore term plans at very affordable rates, even others quote substantially higher prices for consumers opting to buy a term plan with a cover of ₹1 Crore. So it becomes imperative to compare premiums quoted by every top insurer.
| BEST ₹1 CRORE TERM PLANS | PROFILES/ PREMIUMS | |||
|---|---|---|---|---|
30 years old Male Non-Smoker | 30 years old Male Smoker | 30 years old Female Non-Smoker | 30 years old Female Smoker | |
| Max Life Smart Secure Plus | ₹11,131 | ₹17,810 | ₹9,818 | ₹15,709 |
| ICICI Prudential Iprotect Smart | ₹12,687 | ₹21,425 | ₹10,784 | ₹18,212 |
| HDFC Life Click2Protect Super | ₹13,499 | ₹26,998 | ₹11,474 | ₹22,948 |
| Tata AIA Sampoorna Raksha Supreme | ₹11,084 | ₹18,107 | ₹9,438 | ₹15,364 |
| Bajaj Allianz Smart Protect Goal | ₹8,979 | ₹15,993 | ₹7,470 | ₹13,604 |
As you can see, Bajaj Allianz Smart Protect Goal is the most economical 1 Crore term plan for most people who are in and around the age of 30.
Also, if you’d rather watch a video explaining the best term plans, we recently did a podcast episode with a Ditto advisor, which you can watch below
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Conclusion
A ₹1 Crore term plan offers meaningful protection for most people and can be an excellent starting point if you are looking to buy a term insurance policy. These plans come at low premiums, have low eligibility requirements, and often come with a bunch of add-ons that extend substantial protection for your family. All you have to do is speak to a qualified advisor before picking the plan that suits you best.
