Term Life Insurance: More Than Just Tax Savings
In India, term life insurance is often misunderstood as merely a tax-saving tool due to benefits under Sections 80C and 10(10D) of the Income Tax Act. While tax deductions of up to ₹1.5 lakh on premiums and tax-free benefits are significant, they shouldn’t overshadow the primary purpose of term insurance: long-term financial protection for families.
For too long, financial planning in India has focused on investment-led instruments. Life insurance is typically bundled with savings-oriented products like ULIPs and endowment plans, promoting wealth creation rather than risk protection. This mindset has pushed term insurance—the most cost-effective form of life coverage—to the sidelines, leaving many households financially vulnerable.
For families dependent on a single income, the sudden loss of a breadwinner can lead to severe financial distress. Routine expenses such as EMIs, school fees, medical bills, and daily essentials can quickly become overwhelming. According to the Economic Survey 2023-24, India’s per capita income stands at ₹2.12 lakh per annum, highlighting the financial strain that can occur without proper insurance coverage.
Consider a middle-income household’s annual expenses:
- Housing costs in metropolitan cities can range between ₹3,00,000-₹7,00,000.
- Private school fees can range from ₹50,000 to ₹3,00,000 per child annually.
- Daily living expenses for a family of four can cost up to ₹12,00,000.
- Healthcare costs can add another ₹60,000 annually.
Without a financial safety net like term insurance, such households are one crisis away from financial instability. The National Insurance Academy reports that India’s Insurance Protection Gap stands at a staggering 90%. Many individuals choose low coverage amounts to keep premiums minimal, inadvertently defeating the purpose of life insurance. Ideally, one should opt for a sum assured that is 10 to 15 times their annual income.
Digital insurance platforms have made term plans more accessible and affordable. At PhonePe, technology is being used to reshape how India approaches term life cover through:
- Pre-approved offers that reduce issuance time
- Zero-cost assurance with no hidden fees
- Up to 15% discount on plans
- Flexible premium options
- Dedicated Relationship Managers for assistance
The mission is to demystify insurance, bridge India’s protection gap, and empower households with simple and reliable term life solutions. True financial security comes not from returns but from reassurance.
As India moves toward the IRDAI’s vision of ‘Insurance for All by 2047’, it’s time to shift the narrative. Term insurance is not just a checkbox for tax season; it’s a cornerstone of responsible financial planning.
