Term insurance can provide a death benefit during the policy term, subject to the contract. To estimate how much cover to compare, list outstanding debts, essential household spending that would need replacing and major goals the household still needs to fund. Deduct only existing resources that would realistically be available for those needs. Keep emergency reserves and money earmarked for other purposes separate.
Work through a simple example
Suppose the household wants to allow ₹25 lakh for debt, ₹40 lakh for income support and ₹10 lakh for education. If ₹15 lakh of accessible assets and existing cover can be used for those needs, the illustrative gap is ₹60 lakh. This worksheet is a starting point. Check how inflation, changes in living costs and a shorter or longer support period affect the estimate. Avoid counting loan instalments in living expenses if the outstanding loan is already included separately.
Compare the policy term and wording
Map the end date to the years in which dependants are likely to need support. When comparing quotes, hold the sum assured, policy duration and premium payment schedule constant. Check when the policy starts, what happens if a payment is missed, what exclusions apply and whether an optional rider has different eligibility or exclusions. Compare the payout form as well, since a lump sum and instalments can serve different budgeting needs.
Check the proposal and nomination
Review each health, occupation and lifestyle answer before submitting the proposal, even if someone else enters it. Once the policy is issued, check the name, date of birth, cover and nominee details against your records. Ask the insurer how to record a change or handle a minor nominee. Keep the insurer’s acknowledgement, policy schedule and proposal copy together, and tell the nominee where to find them.
Official reference and further reading: IRDAI term insurance master circular and the TaxNexus Insurance hub. This guide is educational. Last updated 4 November 2026.
