Why Balance in Insurance Matters
Insurance is meant to provide security, not confusion. But in India, many people are either unknowingly paying too much for overlapping policies or dangerously under-insured without realizing it.
The goal isn’t to have more insurance—it’s to have the right amount that fits your needs, protects your family, and doesn’t drain your finances.
Over-Insurance: A Silent Drain
Are You Paying More Than You Should?
Nearly one in three urban Indians holds more than one life insurance policy, but very few understand how these policies overlap. People often purchase costly plans—like ULIPs or endowment policies—thinking they are investing, when in fact they may be paying extra for very limited value.
Common Signs of Over-Insurance:
- Premiums exceed 10–15% of your annual income
- Multiple policies cover the same risks
- Expensive ULIPs were sold as savings or investment plans
For example, someone earning ₹10 lakh annually shouldn’t be paying more than ₹1–1.5 lakh in total premiums. Anything beyond this may signal over-insurance.
Under-Protection: A Major Risk
Are You Financially Exposed?
Skipping essential insurance is just as risky. IRDAI data reveals that only three out of ten Indians have sufficient life insurance coverage. That leaves a majority financially exposed in case of an emergency.
Warning Signs of Under-Protection:
- No term plan or personal health insurance
- Life cover below ₹10 lakh in a metro city
- No critical illness or accident cover
A single hospitalisation in a private hospital can cost between ₹3 to ₹7 lakh today. Without insurance, such expenses can severely impact your savings or even push you into debt.
Understanding Life Insurance in India
Know What You’re Buying
It’s important to understand the purpose of different types of life insurance policies:
- Term Insurance: Offers pure protection at low premiums
- Endowment Plans: Combine savings and insurance, with limited returns
- ULIPs: Market-linked investment products bundled with insurance
Which One Do You Need?
- A term plan should be the base of your insurance portfolio
- Consider adding riders like critical illness or accidental death benefit
- Avoid buying plans solely for tax benefits or returns
Smart Coverage Assessment
What Is Enough?
The best way to determine how much coverage you need is by calculating your Human Life Value (HLV). This method typically recommends having life insurance worth 15–20 times your annual income.
For instance:
- If your annual income is ₹8 lakh, your ideal term cover should be ₹1.2 to ₹1.6 crore
- In metro cities, a minimum health cover of ₹10–20 lakh is recommended
- Include outstanding loans and future goals like children’s education or retirement
Ask Yourself:
- Do I have financial dependents?
- Can I manage a medical emergency from my savings?
- Do my current policies reflect my current life stage?
Life Changes, Insurance Should Too
Reassess Regularly
Your insurance needs evolve with your life. Key milestones that should trigger a policy review include:
- Marriage
- Having children
- Buying property
- Switching jobs
- Retirement planning
Aim to review your insurance coverage once every year or after any major life event.
Avoid Costly Insurance Mistakes
Learn From Others’ Errors
- Don’t rely only on employer-provided insurance; it ends when your job does
- Don’t buy insurance just to save tax
- Always disclose your complete medical history; non-disclosure is a leading reason for claim rejection
Over 50% of life insurance claims that get rejected in India are due to incomplete or inaccurate disclosures.
Human Help, Not Just Digital Tools
Talk to an Advisor Who Understands You
While online comparisons and apps are helpful, they can’t replace personal guidance. At Fintoo, we believe in human-first financial planning.
Our expert advisors take time to understand your needs, goals, and budget—then suggest solutions that truly fit.
- We’ll identify if you’re over-insured or under-protected
- We’ll help you align your coverage with your life goals
- We make insurance simple, not sales-driven
Get the Right Insurance Fit Today
The right coverage is not about having the most—it’s about having just enough to feel confident and secure.
Don’t let your family face uncertainty. And don’t let your money go to waste.
[Visit us for a free insurance check-up, tailored just for you.]
Let’s protect what matters, the right way.
Disclaimer: The views shared in blogs are based on personal opinions and do not endorse the company’s views. Investment is a subject matter of solicitation and one should consult a Financial Adviser before making any investment using the app. Investing using the app is the sole decision of the investor and the company or any of its communications cannot be held responsible for it.
