Key Benefits of Choosing a ₹5 Crore Term Insurance Policy Over Smaller Plans

Life is unpredictable. Nobody likes to dwell on how things might go wrong, but when it comes to securing your family's future, it is better to be prepared than sorry. That is what term insurance is for. It is not for returns/investments, but rather to ensure that your loved ones don't need to struggle in case something happens to you.

With the increase in prices and growing responsibilities, more and more people are now opting for larger covers with ₹5 crore instead of the usual ₹1 crore or ₹2 crore policies. But is it really needed? Let's break it down in simple words.

What Is Term Insurance?

Term insurance is like renting a financial safety net. You pay a small amount (premium) annually for a fixed period. If something happens to you during that time, the insurance company pays a big lump sum (called the sum assured) to your family.

It doesn't give you anything back if you survive the term-but that's okay. The idea here isn't to make money. The idea is to make sure your loved ones don't suffer financially when you're not there to support them.

Why Opt for a ₹5 Crore Term Insurance Policy?

Choosing a bigger cover like ₹5 crore isn't about going overboard. It's about understanding how much your family might need if you're suddenly not around. Here's why many people are choosing this amount now:

1. The Cost of Living Is Not the Same Anymore

Everything is more expensive than it was 10 years ago-groceries, rent, school fees, medical bills-you name it. What seemed like a big amount earlier, like ₹1 crore, may not last long today. A larger cover gives your family more breathing room.

2. You Might Have Many Dependents

If you support your parents, spouse, and kids and maybe even pay off EMIs, that's a lot of responsibility. Your absence could leave them without a source of income. A ₹5 crore term plan can help take care of these needs for many years.

3. Kids' Education Needs a Bigger Budget

Higher education is no longer cheap. If your child dreams of studying abroad or pursuing a professional course, you'll want to make sure that dream doesn't get cut short due to lack of money.

4. Medical Costs Are Rising Too

Even if your family stays healthy, old age brings medical needs. If you're not there to help, your spouse or parents should have enough funds to manage treatments and hospital visits.

5. Loans Don't Wait for Anyone

Home loans and car loans don't stop when someone passes away. A higher insurance amount can help alleviate these debts and reduce the financial burden on your family.

How to Choose the Right ₹5 Crore Term Plan

It's not just about picking any policy with ₹5 crore written on it. There are a few things to check before buying:

1. Pick a Trustworthy Insurer

Choose a company that has a good record of settling claims. It's essential that your family doesn't have to struggle or face rejection when they need money.

2. Don't Just Go by the Lowest Premium

Cheaper isn't always better. Look at what's being offered. Are there hidden conditions? Does the insurer provide support during claims? These things matter more than saving a few hundred rupees.

3. Decide How Long You Need the Cover

Most people take term insurance till retirement age-usually 60 or 65. After that, most loans are paid off, and children are financially independent. You don't need lifelong cover if it costs a lot more.

4. Look at Claim Options

Some policies pay the full amount at once. Others pay a part upfront and the rest in instalments. Choose what works best for your family-do they need a monthly income or one big sum?

5. Riders: Add Only If Needed

Riders* are optional features, such as critical illness or accident coverage. They can be helpful but only take them if you need them. Don't get carried away by flashy benefits.

Final Thoughts

Choosing a ₹5 crore term insurance plan may sound like a big step-but when you think about it, it's a responsible one. It's not about being rich or spending more. It's about ensuring that the people you care about are not left in financial trouble if something happens to you.

Smaller policies may not be sufficient to cover future needs, especially with rising costs and long-term goals such as education or loan repayments. If you can manage the premium and your income supports it, going for a higher cover is a sensible choice.

It's like building a strong wall around your family's future-one that protects them from life's financial shocks. And that, more than anything, brings peace of mind.

FAQs

Are ₹5 Crore term insurance policies tax-free for beneficiaries?

Yes, usually the amount your family receives from a term insurance plan is not taxed. It falls under the tax-free category as per Indian income tax laws. But always check the current rules before deciding.

Can I add more coverage to my ₹5 Crore policy after a few years?

Some insurance companies let you increase your coverage later-especially during key life moments like getting married or having a child. However, not all plans permit this, so be sure to ask before making a purchase.

How do I choose the best ₹5 Crore term insurance plan?

Start by listing your needs-how much you earn, your family's expenses, and your loans. Then compare a few policies from trusted insurers. Look beyond just the price. Check for service quality, claim process, and customer support.

Are ₹5 Crore term insurance policies tax-free for beneficiaries?

Yes, the payout received by beneficiaries from a ₹5 Crore term insurance policy is generally tax-free under Section 10(10D) of the Income Tax Act, 1961. However, it's wise to confirm the latest rules before relying on this benefit.