First salary lands and something shifts. The number sitting in the bank account feels small and huge at the same time. Small when compared to the world outside, huge when compared to the student days where the balance usually hovered somewhere between hopeful and alarming, but term insurance does not cross our mind.
Most people open their banking app more than once a week. Sometimes just to confirm the number is still there.
There are immediate plans of course. A slightly better phone. Shoes that do not collapse after six months. Maybe a short trip somewhere where the sea exists and the Wi-Fi does not matter.
Nothing extravagant. Just upgrades. The kind that quietly signals adulthood has begun. Money does that. It creates a soft sense of momentum. But underneath all of those plans sits something slightly more fundamental. Income itself. The ability to earn month after month, year after year, slowly building everything else.
And income, strange as it sounds when you first hear it, is fragile. Term insurance enters the conversation right there. Not glamorous. Not exciting. No graphs that shoot upward. No celebration posts on social media about buying it. It simply performs a single job.
If something happens, the money appears. That is the whole promise. Which is why it often gets ignored. Quiet things usually do.
Yet almost every stable financial structure rests on quiet things that nobody talks about very often.
Also, money conversations often begin a little late. Usually, after someone has already started earning, spending, and occasionally wondering if they should be doing something smarter with their income. That is where platforms like Finanjo step in, trying to make financial decisions feel less intimidating and more understandable for people who are just starting out. So, keep reading to understand term insurance.
India is underinsured. That is not dramatic language. It is data.
According to the Insurance Regulatory and Development Authority of India, life insurance penetration stood at about 3.7 percent of GDP in FY2023. That sounds technical. What it really means is this: insurance coverage, as a slice of the economy, is modest.
And penetration does not even tell you whether people are adequately covered. It just tells you premiums exist.
The real concern is the protection gap. Global reinsurer Swiss Re has repeatedly estimated India’s mortality protection gap in trillions of dollars. That gap is the difference between what families would need if income stops and what they actually have.
That difference is not small. It is structural. So the question becomes simple. If you are starting early, do you want to be part of that gap or reduce it?
Premiums are age-linked and health-linked.
A 23 year old non smoker pays dramatically less than a 35 year old with borderline cholesterol. Over 30 or 35 years, that difference compounds quietly and relentlessly.
Conditions that appear mild in everyday conversation still influence underwriting decisions. Asthma, thyroid imbalances, mild hypertension. None of these necessarily prevent insurance coverage. They simply make the conversation with insurers slightly more complicated. Buying early removes most of that negotiation.
The premium is locked while medical history is still short and uncomplicated. And then there is eligibility. Develop asthma later? Thyroid issues? Mild hypertension? Suddenly underwriting becomes a negotiation.
Buy early. Lock the rate. Remove uncertainty. Is it urgent at 22? Maybe not. Is it efficient? Very.
Unmarried does not equal financially irrelevant.
In India, family equations are layered. Parents might not depend on you today. But healthcare costs rise. Retirement savings deplete. It is when situations change, sometimes suddenly. Parents may be financially comfortable today. Ten years later healthcare expenses might begin rising steadily. Retirement savings may stretch thinner than expected.
Medical inflation in India has often hovered between 8 and 12 percent annually according to several industry estimates. That pace is noticeably higher than general inflation. A medical bill that looks manageable today can transform into something much heavier after a decade.
Dependents sometimes appear quietly. You may not see yourself as someone’s financial pillar. But over time, you might become one. Gradually. Without announcing it. So no, dependents are not always obvious.
HLV sounds academic. It is not. It is simply the present value of your future income. The economic worth of your working years.
Annual Income multiplied by Remaining Working Years.
Example:
Age 24. Income ₹8 lakh. Retirement at 60. Thirty six working years left.
| Component | Value |
| Current Age | 24 |
| Retirement Age | 60 |
| Remaining Working Years | 36 |
| Annual Income | ₹8,00,000 |
| Basic HLV (Income × Years) | ₹2.88 cr |
That ₹2.88 cr is the minimum theoretical income replacement, assuming income never grows which, realistically, it will.
Now let’s factor modest growth. Assume 7 percent annual income growth over 36 years.
| Year | Approx Annual Income (7% growth) |
| Year 1 | ₹8,00,000 |
| Year 10 | ₹15,73,000 |
| Year 20 | ₹30,95,000 |
| Year 30 | ₹60,88,000 |
| Year 36 | ₹91,77,000 |
Under a steady 7 percent growth assumption, total lifetime earnings can cross ₹6 to ₹8 cr across the full working horizon. So when someone says “₹1 cr is enough,” it deserves a second look.
Is it a number chosen for comfort? Or for adequacy? HLV is not perfect. It is directional. But it prevents dramatic underestimation.
Let’s simplify again.
Income ₹10 lakh annually. Coverage range ₹1.5 to ₹2.5 cr as a base. Higher if liabilities exist. But let’s quantify affordability.
If monthly salary is ₹80,000, what does that realistically look like?
| Item | Amount |
| Monthly Salary | ₹80,000 |
| Annual Salary | ₹9,60,000 |
| Suggested Coverage Range | ₹1.5 – ₹2.5 cr |
| Estimated Annual Premium (Age 24–26, Non Smoker) | ₹12,000 – ₹18,000 |
| Premium as % of Annual Income | ~1.2% – 1.8% |
Now pause.
Less than 2 percent of annual income.
We often assume insurance is expensive. In reality, early term cover is usually inexpensive relative to earning power. It is not a cash flow burden. It is more of a priority decision and that distinction matters.
HLV replaces income. It does not clear loans. Education loan. Credit card debt. Future home loan. Maybe parents’ medical expenses. These stack up.
Suppose you carry ₹15 lakh in education debt and expect a ₹60 lakh home loan in five years. Suddenly your required coverage is not theoretical. It is specific. Financial planners often recommend 10 to 20 times annual income. For younger earners with steep growth potential, even 15 to 25 times income is argued.
Does that mean overinsure blindly? No. Premium affordability still matters. But underinsuring because a number “feels big” today is short sighted.
Five to six percent average inflation does not sound dramatic. But stretch it across 25 years. ₹1 cr today will not behave like ₹1 cr later. Healthcare inflation? Often worse.
As already mentioned, healthcare costs move even faster. Advanced treatments, diagnostic technology, specialized care. Medical systems evolve, and costs evolve with them. Some insurers offer increasing cover options that gradually raise the insured amount during the policy period.
Those features are worth examining closely. Future proofing rarely produces excitement in the present moment. Some insurers offer increasing cover options. Step up benefits. Evaluate them carefully. Read the terms. Then read again. Future proofing is less glamorous than investing. But it is foundational.
Premiums qualify under Section 80C of the Income Tax Act, 1961 within prescribed limits. Death benefits are generally exempt under Section 10(10D), subject to policy conditions.
Yes, tax savings reduce effective cost.
No, tax savings should not be your reason.
If the only reason you are buying insurance is deduction, pause. Re-evaluate.
Term insurance is pure risk cover. No maturity value. No return component. If nothing happens, the policy expires. ULIPs blend insurance with investment.
Are ULIPs flawed? Not inherently. But when protection is your objective, dilution complicates things.
A ₹1 cr term policy for a healthy 25 year old might cost ₹10,000 to ₹15,000 annually. A ULIP providing similar life cover will cost significantly more because part of the premium funds investment allocation.
Term insurance focuses purely on protection. If the insured person passes away during the policy term, the nominee receives the sum assured. If the policyholder survives the entire period, the policy simply concludes.
ULIPs operate differently. A Unit Linked Insurance Plan combines life cover with market linked investments. Part of the premium funds insurance coverage while another portion flows into investment funds. ULIPs are not inherently flawed.
A ULIP providing similar coverage generally requires higher premiums due to investment allocation costs. Insurance protects income. Investments grow capital. Keeping those functions separate often simplifies long term planning.
Most insurers allow complete digital onboarding. Online often means lower premium due to reduced distribution costs. Easier comparison too. But one thing remains critical. Disclose smoking habits, pre existing conditions, and any existing policies honestly, because claim settlement ultimately depends on complete and accurate transparency.
The Insurance Regulatory and Development Authority of India reports claim settlement ratios above 90 percent for many large insurers in recent years. That is reassuring. Still, ratio alone does not tell the whole story. Look at solvency ratio, claim processing timelines and service track record.
Price is one variable but not the only one.
Risk feels distant at 22. Understandable. But insurance is not about probability alone. It is about consequence.
Urban India has seen rising road accident numbers over the years. Lifestyle conditions linked to stress also appear earlier than they once did. These observations are not meant to create fear. They simply highlight that life does not always follow predictable timelines.
Buying insurance early keeps the process uncomplicated. Waiting until health conditions emerge introduces complexity that could have been avoided. Waiting until health changes is reactive. Buying early is strategic. Would you rather negotiate with an insurer after diagnosis? Or before?
First, clear high interest debt. Then, build an emergency fund covering 3 to 6 months of expenses. After that, buy adequate term insurance. Only then accelerate long term investing.
Protection first. Growth next. Because compounding works better when the base is protected. Slightly repetitive, yes. But true.
If you genuinely have no dependents and zero liabilities, urgency may be lower. But early purchase locks lower premiums and secures insurability.
Typically 15 to 20 times annual income, adjusted for liabilities and realistic income growth assumptions.
When stable income begins. Early 20s usually offer the lowest premium band.
Yes. You can buy additional policies or opt for step up features if available.
Generally no, subject to compliance with provisions under the Income Tax Act, 1961.
Gen Z has far better access to information than earlier generations. Digital comparison tools, transparent pricing, and publicly available claim data make evaluating insurance simpler and more informed than before.
Even so, the core decision is straightforward. Protect your income, not because it sounds responsible or trendy, but because your earning capacity is your biggest financial asset in your 20s. Everything else builds on that, steadily and without noise.
Mutual funds, retirement savings, equity investments. All of them work better when the underlying income is protected.
And conversations around money become easier when they are broken down in a way that feels human and practical. That is the idea behind Finanjo. Not to complicate finance, but to make it understandable enough that people can actually act on it while the stakes are still small and the future is still wide open.
First salary lands and something shifts. The number sitting in the bank account feels small and huge at the same time. Small when compared to the world outside, huge when compared to the student days where the balance usually hovered somewhere between hopeful and alarming, but term insurance does not cross our mind.
Most people open their banking app more than once a week. Sometimes just to confirm the number is still there.
There are immediate plans of course. A slightly better phone. Shoes that do not collapse after six months. Maybe a short trip somewhere where the sea exists and the Wi-Fi does not matter.
Nothing extravagant. Just upgrades. The kind that quietly signals adulthood has begun. Money does that. It creates a soft sense of momentum. But underneath all of those plans sits something slightly more fundamental. Income itself. The ability to earn month after month, year after year, slowly building everything else.
And income, strange as it sounds when you first hear it, is fragile. Term insurance enters the conversation right there. Not glamorous. Not exciting. No graphs that shoot upward. No celebration posts on social media about buying it. It simply performs a single job.
If something happens, the money appears. That is the whole promise. Which is why it often gets ignored. Quiet things usually do.
Yet almost every stable financial structure rests on quiet things that nobody talks about very often.
Also, money conversations often begin a little late. Usually, after someone has already started earning, spending, and occasionally wondering if they should be doing something smarter with their income. That is where platforms like Finanjo step in, trying to make financial decisions feel less intimidating and more understandable for people who are just starting out. So, keep reading to understand term insurance.
India is underinsured. That is not dramatic language. It is data.
According to the Insurance Regulatory and Development Authority of India, life insurance penetration stood at about 3.7 percent of GDP in FY2023. That sounds technical. What it really means is this: insurance coverage, as a slice of the economy, is modest.
And penetration does not even tell you whether people are adequately covered. It just tells you premiums exist.
The real concern is the protection gap. Global reinsurer Swiss Re has repeatedly estimated India’s mortality protection gap in trillions of dollars. That gap is the difference between what families would need if income stops and what they actually have.
That difference is not small. It is structural. So the question becomes simple. If you are starting early, do you want to be part of that gap or reduce it?
Premiums are age-linked and health-linked.
A 23 year old non smoker pays dramatically less than a 35 year old with borderline cholesterol. Over 30 or 35 years, that difference compounds quietly and relentlessly.
Conditions that appear mild in everyday conversation still influence underwriting decisions. Asthma, thyroid imbalances, mild hypertension. None of these necessarily prevent insurance coverage. They simply make the conversation with insurers slightly more complicated. Buying early removes most of that negotiation.
The premium is locked while medical history is still short and uncomplicated. And then there is eligibility. Develop asthma later? Thyroid issues? Mild hypertension? Suddenly underwriting becomes a negotiation.
Buy early. Lock the rate. Remove uncertainty. Is it urgent at 22? Maybe not. Is it efficient? Very.
Unmarried does not equal financially irrelevant.
In India, family equations are layered. Parents might not depend on you today. But healthcare costs rise. Retirement savings deplete. It is when situations change, sometimes suddenly. Parents may be financially comfortable today. Ten years later healthcare expenses might begin rising steadily. Retirement savings may stretch thinner than expected.
Medical inflation in India has often hovered between 8 and 12 percent annually according to several industry estimates. That pace is noticeably higher than general inflation. A medical bill that looks manageable today can transform into something much heavier after a decade.
Dependents sometimes appear quietly. You may not see yourself as someone’s financial pillar. But over time, you might become one. Gradually. Without announcing it. So no, dependents are not always obvious.
HLV sounds academic. It is not. It is simply the present value of your future income. The economic worth of your working years.
Annual Income multiplied by Remaining Working Years.
Example:
Age 24. Income ₹8 lakh. Retirement at 60. Thirty six working years left.
| Component | Value |
| Current Age | 24 |
| Retirement Age | 60 |
| Remaining Working Years | 36 |
| Annual Income | ₹8,00,000 |
| Basic HLV (Income × Years) | ₹2.88 cr |
That ₹2.88 cr is the minimum theoretical income replacement, assuming income never grows which, realistically, it will.
Now let’s factor modest growth. Assume 7 percent annual income growth over 36 years.
| Year | Approx Annual Income (7% growth) |
| Year 1 | ₹8,00,000 |
| Year 10 | ₹15,73,000 |
| Year 20 | ₹30,95,000 |
| Year 30 | ₹60,88,000 |
| Year 36 | ₹91,77,000 |
Under a steady 7 percent growth assumption, total lifetime earnings can cross ₹6 to ₹8 cr across the full working horizon. So when someone says “₹1 cr is enough,” it deserves a second look.
Is it a number chosen for comfort? Or for adequacy? HLV is not perfect. It is directional. But it prevents dramatic underestimation.
Let’s simplify again.
Income ₹10 lakh annually. Coverage range ₹1.5 to ₹2.5 cr as a base. Higher if liabilities exist. But let’s quantify affordability.
If monthly salary is ₹80,000, what does that realistically look like?
| Item | Amount |
| Monthly Salary | ₹80,000 |
| Annual Salary | ₹9,60,000 |
| Suggested Coverage Range | ₹1.5 – ₹2.5 cr |
| Estimated Annual Premium (Age 24–26, Non Smoker) | ₹12,000 – ₹18,000 |
| Premium as % of Annual Income | ~1.2% – 1.8% |
Now pause.
Less than 2 percent of annual income.
We often assume insurance is expensive. In reality, early term cover is usually inexpensive relative to earning power. It is not a cash flow burden. It is more of a priority decision and that distinction matters.
HLV replaces income. It does not clear loans. Education loan. Credit card debt. Future home loan. Maybe parents’ medical expenses. These stack up.
Suppose you carry ₹15 lakh in education debt and expect a ₹60 lakh home loan in five years. Suddenly your required coverage is not theoretical. It is specific. Financial planners often recommend 10 to 20 times annual income. For younger earners with steep growth potential, even 15 to 25 times income is argued.
Does that mean overinsure blindly? No. Premium affordability still matters. But underinsuring because a number “feels big” today is short sighted.
Five to six percent average inflation does not sound dramatic. But stretch it across 25 years. ₹1 cr today will not behave like ₹1 cr later. Healthcare inflation? Often worse.
As already mentioned, healthcare costs move even faster. Advanced treatments, diagnostic technology, specialized care. Medical systems evolve, and costs evolve with them. Some insurers offer increasing cover options that gradually raise the insured amount during the policy period.
Those features are worth examining closely. Future proofing rarely produces excitement in the present moment. Some insurers offer increasing cover options. Step up benefits. Evaluate them carefully. Read the terms. Then read again. Future proofing is less glamorous than investing. But it is foundational.
Premiums qualify under Section 80C of the Income Tax Act, 1961 within prescribed limits. Death benefits are generally exempt under Section 10(10D), subject to policy conditions.
Yes, tax savings reduce effective cost.
No, tax savings should not be your reason.
If the only reason you are buying insurance is deduction, pause. Re-evaluate.
Term insurance is pure risk cover. No maturity value. No return component. If nothing happens, the policy expires. ULIPs blend insurance with investment.
Are ULIPs flawed? Not inherently. But when protection is your objective, dilution complicates things.
A ₹1 cr term policy for a healthy 25 year old might cost ₹10,000 to ₹15,000 annually. A ULIP providing similar life cover will cost significantly more because part of the premium funds investment allocation.
Term insurance focuses purely on protection. If the insured person passes away during the policy term, the nominee receives the sum assured. If the policyholder survives the entire period, the policy simply concludes.
ULIPs operate differently. A Unit Linked Insurance Plan combines life cover with market linked investments. Part of the premium funds insurance coverage while another portion flows into investment funds. ULIPs are not inherently flawed.
A ULIP providing similar coverage generally requires higher premiums due to investment allocation costs. Insurance protects income. Investments grow capital. Keeping those functions separate often simplifies long term planning.
Most insurers allow complete digital onboarding. Online often means lower premium due to reduced distribution costs. Easier comparison too. But one thing remains critical. Disclose smoking habits, pre existing conditions, and any existing policies honestly, because claim settlement ultimately depends on complete and accurate transparency.
The Insurance Regulatory and Development Authority of India reports claim settlement ratios above 90 percent for many large insurers in recent years. That is reassuring. Still, ratio alone does not tell the whole story. Look at solvency ratio, claim processing timelines and service track record.
Price is one variable but not the only one.
Risk feels distant at 22. Understandable. But insurance is not about probability alone. It is about consequence.
Urban India has seen rising road accident numbers over the years. Lifestyle conditions linked to stress also appear earlier than they once did. These observations are not meant to create fear. They simply highlight that life does not always follow predictable timelines.
Buying insurance early keeps the process uncomplicated. Waiting until health conditions emerge introduces complexity that could have been avoided. Waiting until health changes is reactive. Buying early is strategic. Would you rather negotiate with an insurer after diagnosis? Or before?
First, clear high interest debt. Then, build an emergency fund covering 3 to 6 months of expenses. After that, buy adequate term insurance. Only then accelerate long term investing.
Protection first. Growth next. Because compounding works better when the base is protected. Slightly repetitive, yes. But true.
If you genuinely have no dependents and zero liabilities, urgency may be lower. But early purchase locks lower premiums and secures insurability.
Typically 15 to 20 times annual income, adjusted for liabilities and realistic income growth assumptions.
When stable income begins. Early 20s usually offer the lowest premium band.
Yes. You can buy additional policies or opt for step up features if available.
Generally no, subject to compliance with provisions under the Income Tax Act, 1961.
Gen Z has far better access to information than earlier generations. Digital comparison tools, transparent pricing, and publicly available claim data make evaluating insurance simpler and more informed than before.
Even so, the core decision is straightforward. Protect your income, not because it sounds responsible or trendy, but because your earning capacity is your biggest financial asset in your 20s. Everything else builds on that, steadily and without noise.
Mutual funds, retirement savings, equity investments. All of them work better when the underlying income is protected.
And conversations around money become easier when they are broken down in a way that feels human and practical. That is the idea behind Finanjo. Not to complicate finance, but to make it understandable enough that people can actually act on it while the stakes are still small and the future is still wide open.
A contributor to the Finanjo blog, where I share insightful and easy-to-understand content focused on educating readers about finance. With a clear and approachable writing style, I simplify complex topics to make them more understandable.
A contributor to the Finanjo blog, where I share insightful and easy-to-understand content focused on educating readers about finance. With a clear and approachable writing style, I simplify complex topics to make them more understandable.
