26 Oct, 2021 | Term Life Insurance

The Complete Truth Behind The Huge ‘1 Crore Term Insurance Cover’

Team Beshak
By Team Beshak
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You might have come across advertisements and emails and SMSes from Insurers as well as web aggregators urging you to buy a 1 Cr Term insurance plan at very low costs.  These plans can seem very appealing - after all, it just costs INR 400 per month for a huge 1 Crore life cover! In fact, they’ll even do the math and tell you that it’s just about INR 16 per day. Cost of one Chai that is! Right?

However, before you jump the wagon and buy the plan just because it seems like a very good offer - wait. Hold on, take a step back, and really understand if you need Term Insurance. If yes, what is the total cover you should buy!

What is a 1 Crore Term Insurance? 

It is exactly what it says - a term insurance plan that pays your family/nominee(s) a sum of 1 Crore in case of your death during the policy term. Plain and simple! 

If you are the only earning member of your family, and everyone else depends on your earnings for their expenses, you must buy a term insurance cover and safeguard your family’s financial future. In the absence of term insurance, your family may have to undergo a tough financial time in the event of your early death. They may also have to compromise on your dreams/goals - quality education of your children, own home, secure life after retirement, etc. 

Well-thought-out term insurance helps you secure a good life for your family even in your absence.  

Who should opt for term insurance? 

Anyone who has financial dependents should evaluate buying a term insurance plan. There could be a few exceptions to this. So, let’s run through a list of situations where one must seriously consider term insurance - 

  • You have financial dependents, especially non-earning family members like retired parents or a wife and children, who rely on your income to meet their expenses in the short-term and long-term.
  • You have the responsibility of a large loan, which could become a burden on your family in case of your death. 
  • You have not saved enough wealth that will keep your family’s lifestyle intact in the long run
  • Have major unfinished responsibilities or big dreams that your income will help achieve - like a foreign education or a destination wedding 

If you do not meet any of these conditions, you do not need to buy a term insurance plan. For example - if you have recently graduated from college and have begun working, you might come across insurers trying to convince you to buy a term insurance policy at a young age. However, since you don’t need term insurance to cover any of the needs listed above - you don’t have to buy it.

Is a 1 Crore Term Plan Suitable? 

Before you get swayed by this immense number, let us take a step back to understand what should be the ideal term insurance cover amount one should pick. Every family is unique, and everyone has their requirements. Instead of focusing on the overall cover amount of Rs 1 crore, it is essential that you first prioritize your family's needs and accordingly calculate a suitable cover. 

A cover amount should be decided based on the needs and requirements of your family and not based on a thumb rule like 1 Crore cover or a 20X your annual income. So, let us understand the process to find a term cover that fits your family’s financial needs.

How to choose a Cover? 

There are various factors to be considered while choosing the right cover for your family. Ensure that you pick a cover that will be sufficient for your family, and they will not have to compromise their lifestyle in your absence. 

The best way you could calculate and find a sufficient cover is- 

  1. Living Expenses Fund (includes basic needs, groceries, monthly expenses, etc.)
  2. ADD - Major Expenses Fund (comprises huge responsibilities like children’s education or wedding)
  3. ADD - Major Liabilities Fund (any large loans like a home loan)
  4. MINUS - Existing Funds (Savings, FD’s, etc multiplied by appropriate risk factors)

*You can leave the existing funds untouched if you want to play a little safe. 

With the help of this formula, you can find a cover amount that will meet your family’s needs. So, instead of worrying about the best Rs 1 Crore term plan, you should shift your focus to choosing the right amount of cover followed by ideal customizations as per your family’s needs. 

You could also check out Beshak TruMatch - the first-ever term insurance recommendation engine - that will help you decide on the right cover amount that your family needs, as well as other customizations that you’ll need to choose so your term insurance pick, is perfectly tailored to your family’s needs. 

You can sign up for Beshak TruMatch here - Bit.ly/Tru-Match 


If you have any questions you’d like to ask our experts, you can post them on the Beshak Insurance Forum and get answers for free!

Key takeaways
  1. A 1 Crore term plan will pay your family a sum assured of INR 1 Crore in case you die during your policy duration.
  2. Don’t get swayed by these 1 Crore term plans that are sold at cheaper rates.
  3. Consider buying a term insurance policy only if you have - financial dependents, taken a large loan, some major unfinished responsibilities, or haven’t been able to make enough wealth.
  4. Don’t rely on the 20X your annual income thumb rule while deciding the term insurance cover amount for your family.
  5. Every family is unique and has its own requirements. It is important that you prioritize your family’s needs and accordingly choose a suitable cover. 
  6. Buy a term plan with the right cover amount & customizations so that your family won’t have to compromise on their dreams and lifestyle in your absence.
Team Beshak
Written by,
Team Beshak, We breathe insurance :)

We are a group of young members of the Beshak community. We come together to brainstorm, write relevant and useful content for people (just like us) who want to figure insurance on their own. If you too want to share inputs/write for us - send us a "hey" to info@beshak.org

1 Comments
27 Oct, 2021
by: Subhash Pandey

Good read for those who have no financial understanding. Well written👍

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27 Oct, 2021
by: Aayush Dubey

Thanks a lot, Subhash!


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