Best Life Insurance Policy in India-Which one it is?

Which is the Best Life Insurance Policy in India? I often face this question. Especially, when someone looking for investment, planning for their kids’ future or saving tax. So which plan it is?

Best Life Insurance Policy in India

In this post, I am repeating the basic GYAAN of insurance in a different way. Before searching for an answer of “Best Life Insurance Policy in India” first, understand why you need insurance. Insurance is a risk-mitigating tool. It means you are transferring your risk to the insurance company. For this, insurance company charging you the premium. So if you feel there is a risk of life (death), then buy life insurance. If there is a risk of death, then you buy health insurance. Same way,  if you find the risk of accident, then buy an accidental insurance.

This is the major reason of buying insurance. However, in reality, the insurance meaning is entirely different especially for us. We feel insurance as an investment product. So we are searching for “Best Life Insurance Policy in India”. The insurance concept, especially when it comes to LIFE INSURANCE is purely backstabbed. By all of US means insurance companies, agents, and buyers. No one bothers about how much life cover I am having. Same way insurance companies, banks, or agents not bother.

Let us understand the types of insurance policies offered in India. The situation may be same in other countries. But concentrate our topic of discussion to India alone.1) Whole Life Insurance Policies-As the name indicates the life cover will be up to the policy holder’s death. The main purpose of this product

1) Whole Life Insurance Policies-As the name indicates the life cover will be up to the policyholder’s death. The main purpose of this product creates an estate to his dependents. However, in reality, life insurance companies provide the flexibility of maturity payout. For example, in case of LIC’s old whole life insurance policy, either the maturity will be at 80 years of age or 40-year policy term completion (whichever is later).

As the policy period is long, the premium will be very less. However, in reality, agent’s never sell such products. Why? The premium will be less. So the earning probability will also be less. Bonus rates may be higher than any other products (I think currently LIC offers Rs.70 per year per Rs.1, 000 SA as a bonus). However, the result will be returns of 7% to 8%. However, do you feel 8% is the BEST return for an investment of 40 years? If you found this as Best Life Insurance Policy in India, then go ahead.

For example, check my post on whole life insurance at “LIC’s Whole Life Plan-Best for Estate creation“.

2) Endowment Plans-These plans cover your life risk up to the maturity period. You simply pay the premium up to the policy period. At maturity, you receive the Sum Assured+Bonus. In case the death of the life assured, the nominee will receive, the Sum Assured+Bonus accrued until that day. There may be different variants to it like normal endowment plans or limited period endowment plans. However, the basic features are same.

Why you can consider this as ‘Best Life Insurance Policy in India”? If you feel 5% to 6% is best return and the life risk of 5 times to 10 times of yearly income is best to sustain your dependence in case of your absence.

Check the examples of such plans at “LIC’s New Endowment Plus (Table No.835)-Features, Benefits and Review” , “LIC’s Jeevan Labh (Table No.836)-Features and Review” and “LIC’s new plan Limited Payment Endowment Plan (Table No. 830)-Review“.

3) Money Back Plans-These are again nothing but typical endowment plans. But you receive some % of the sum assured during the policy period. Buyers feel this as an advantage. However, check the reality. Insurance companies charge higher premiums for such plans.

Why you can consider this plan as “Best Life Insurance Policy in India”? If you feel money required for you at regular interval of policy period, 5% to 6% is best return and as usual with lesser life risk, then definitely go ahead.

Check the examples of such plans at “LIC’s new plan 2015-New Children’s Money Back Plan (No.832) Review“.

4) Special plans-For example, during tax saving season, LIC launches special plan. This year they launched Jeevan Shikhar. These are for a limited period with some new features. But they are truly meant to garner business. Other variants are like LIC’s Jeevan Saral. Designed beautifully. LIC received huge recognization. However, check the experience of buyers after 10 years or so. The returns are just around 5%.

If you feel that such products are really “Best Life Insurance Policy in India”, then go ahead.

Check the examples of such plans at “LIC’s New Plan 2016-Jeevan Shikhar (Table No.837)-Feature and Review“, “LIC’s New Plan 2016-Jeevan Pragati (Table No.838) Review” and “LIC’s Jeevan Saral-Why so much confusion?“.

5) ULIPs-These are market-related products. Historically sold by private insurance companies and later on LIC too entered into it. But nowadays no agent ready to sell. The reason is expense ratios of such plans reduced. So agents also started to earn less.

In reality, these products are still costly when you compare with mutual funds. The other two negatives are hard to track the historical data and liquidity. Also, such products never fulfil your actual insurance requirement. Because if go for the actual insurance need, then you can’t afford the premium.

If you don’t have any issues, then these may be your “Best Life Insurance Policy in India”.

6) Term Insurance Plans-These are pure life insurance products. Means insurance companies only ask you the premium based on the risk they are offering you. In such plans, there will not be any investment amount. The premium will be purely for the life risk insurance companies providing you. If one opts for say Rs.1 Cr term insurance for 30-year term and the insured die within this 30-year period, then his nominee receive Rs.1 Cr. If his death does not occur within this 30-year period, then nothing will be payable back to insured. No investment part in such products. Therefore, you will not receive anything in return at maturity.

When we are looking for insurance plans, these are the one, which offers pure LIFE INSURANCE. Refer below link to know more about the features and top 5 term insurance products in India.


Here my intention was not to introduce the features of all types of life insurance products. Many of you all know the basics of life insurance. However, make sure that your search of “Best Life Insurance Policy in India” must end with the product called TERM INSURANCE. Because Term Insurance is the must have and best product which you buy for life. It is a MUST for all. But sadly regulators, insurance companies, and agents never sold this wonderful product. Also, we buyers never felt that we are looking for LIFE INSURANCE but not a product which combines INSURANCE+INVESTMENT. We simply followed agents, insurance companies or the advice of our friends. However, forgot the real need of life insurance and how under insurance badly affects our financial dependence life.

Now think twice before buying a life insurance. In my view, the “Best Life Insurance Policy in India” is only term insurance.

Refer below my posts and a video of how to calculate returns on your life insurance investment before believing on me.

92 Responses

  1. Hi,
    I am Srinath from Hyderabad and I am about 30 yrs old and about to marry and I can invest around 3 to 4k per month
    I want to take a LIC policy so please suggest me a insurance policy which gives me a good return if survive the policy period or good money to my family if something happened to me.
    So basically I am looking for a policy which gives me life cover and good returns too.
    Some one suggested me a LIC Jeevan Anand and Amulya Jeevan are good choices but I want to know is these policy are good or is there my other policies like these in LIC or any other.
    And can I take this Jeevan Anand and Amulya Jeevan policies online or I have to go through some agents because when I check for premiums there is a difference between agents and LIC portals premium for 5L rs.

  2. Hello
    I have Canara hsbc smart life long plan.I have to pay 50000 annually for 10 years.I have already paid for 5 years.Should I continue to pay for next 5 years or should I quit?Kindly suggest.

  3. I have hdfc life super saver income plan. I have to pay 1.5 lacs annually for 8 years. I already paid for 2 years. Should I surrender now (loosing 2.1 lacs)? Or should I make it pay up, after paying for one more year? Kindly advise.

  4. I have 2 LIC jeevan anand policys after 2 years my policy lapse & revived it. again after 2 years ( actually 4 years from first paid premium) can I stop the premium payments & paidup the policy as actually I paid 4 years premium or as lapsed policy revived it is counted as 2 years only please clarify
    Tell me which is best option paidup or surrender

  5. Hello Basavraj,

    I am writing in to get information on traditional life insurance policies that I and my wife(housewife) have bought. At this time I am feeling that we are paying too much premium for the cover and real returns are below FD’s. Therefore I recently bought a term cover of 1 cr with LIC. In addition, I have three significant policies:
    1. LIC’s Jeevan Anand -with Profits+Accidental benefit- Prem 31.5k/yr -Sum assured 5lk-started in 2013-maturity 2030.
    2. BIMA GOLD- prem 24k/yr-sum- Sum assured 5lk with accidental benefit-start yr 2006- maturity 2021
    3. Max Life Gain Premier Endowment-Sum assureed 3.2 lk- prem/yr- 30k/yr-start 2015- maturity 2035. But premium payment is for 8 years. Bought primarily to get insurance for my wife, whose a housewife. And I think for house wifes there are no term plans.

    Can you please tell me as what % annual return (including the time value of money) I can expect in long term and should I continue or not. What would be your advice, keeping in mind the risk associated with my term insurance cover which started in May 2015, loss in terms of surrender value which is typically 0.3 of premium paid, wife being a house-wife and downside risks involved with just stop paying the premiums?


    1. Shri-From all you can expect around 5% to 6% returns. Considering such type of low returns for long term investment, I feel they are purely dumb products. Hence, better to come out at the earliest.
      There may be some % of loss, but it does not mean that we must commit same mistake for next 10-20 years.

      1. Thank you for your views.
        What about the cover I loose on my wife(whose a housewife). Can I get a life/term cover cover for my wife?

          1. I agree. But was exploring the possibility.
            I think, one of the Life insurance(with 5 lakh cover) policy I intend to cancel is listed in my Term policy(1Cr). Will surrendering of that policy negatively impact the Term insurance Policy?

  6. Hello,
    I appreciate for the information provided here.
    Need small help about Lic’s Jeevan Adhar Plan.
    Will proposer can get the plan benefit if LA is alive in this plan?
    In my case, the proposal is handicapped person and need benefit from this plan
    Please help me on this.

  7. Hello, could you please give me more information about LIC’s Jeevan Laksha and Jeevan Anand.
    Also if possible, please let me know which is the single premium plan for a Kid and Adult

  8. Hi Basu,

    I am Madhu, 31 Male, Married and No Children yet. I have gone through your post and it was really informative.

    In 2012, started LIC Jevan Anand Policy for 3 lacs for Life Insurance purpose and paid all premiums till date. Later in 2015 I purchased an Online Term Policy from HDFC Life with Life cover of 50 lacs and paid 2 premiums till date.

    Now I am feeling that continuing with LIC is no more needed. Is it a good idea to surrender my LIC policy?

  9. Hi,
    I am Jai, 35 years old. After going through lot of portals I shortlisted 3 for Term Insurance (30 years) namely Max Life, ICICI & SBI. I was a passive smoker for 10 years and now I have quit smoking for last 3 months. There are 2 options in premium one is SMOKER and the other is NON-SMOKER. There is section where it asks for TOBACCO usage in last 1year for Max Life & 5 years for ICICI.

    Now that I have quit Smoking whether I need to check the option as SMOKER or NON-SMOKER.
    I am worried if they reject claim after my demise.

    Kindly advice. Thanks.

  10. Hi Sir
    i was planning and in fact finalised max life for buying term plan and today i heard that max insurance business is being acquired by HDFC life. will it effect customers.

    Should i stick to max or reevaluate.


  11. Sir,

    What do you think is the future of Traditional Plans in the years to come?

    This is because interest rates will come down for sure in next few years as our financial markets become developed and mature. In such a scenario, how will these products generate even minimum prescribed indicative returns of 4%?

    For example, LIC the biggest business generator through traditional plans declares returns in the range of 4% to 5% since many years. This is when it generates around 7% returns on its investment. Naturally, the balance is used for paying commissions, administration expense and profit.

    As interest rates come down, LIC’s ROI will also reduce. Then how will LIC be able to generate returns for its policy holders even at 4% (minimum indicative rate of return)

  12. Hello Sir,

    Nice article, Need advice on following.

    I am 35 Years with Wife 30 Years and 4 Year one Kid. I am working in IT Industry

    Term Insurance:
    I am running a ICICI IPROTECT term plan since 2011 for 1 CR. At the time of policy i was smoker [limited on daily]/ drinker [occasional], but i didn’t mentioned these things in Policy as my agent told me its very limited not to worry and no need to declare. company did Medical Test and then issued me policy. But after purchase i got to know that do not hide any fact at the time of policy. Now i am in doubt if any claims comes then it may be rejected. I also read about changes in Article 45. But would like to know your advice is there any chances that company can reject claim if arise. FYI, I have informed company as well about these changes in habit via email.

    Health Insurance:
    I have 2 Lacs insurance cover for my family and 3 lacs for my senior citizen parents from my employer. I want to extend the health insurance for additional 5 lacs for my family, which one should i go. I recently purchased CIGNA TTK health Plus, but cancelled due to multiple issues while policy issuance. Kindly suggest which plan to go for and also do you suggest to include super Top up now or shall i add it latter after say 3-4-5 years

    I am doing SIP of 20000/ month in multiple funds.
    – Reliance Small cap
    – DSP Micro fund
    – HDFC Mid cap opportunities
    – ICICI PRU discovery fund
    – SBI Mid cap fund

    I stopped SIP’s in HDFC Tax Saver, Reliance Tax Saver. as i do not need now any further tax saving instruments. but i do have lump sump amount still with these funds which was accumulated in last 4-6 years

    I do have some lump sump amount in Liquid funds KOTAK Liquid fund and DSP short term debt fund

    Could you please advice me based on my portfolio is it good to create wealth in longer duration say around 10- 15 years. do you suggest any changes, I have recently reshuffled my portfolio, FYI.

    Kindly suggest and advice

      1. Follow on question:

        1- My Time horizon is more than 15 years
        2- Which large caps would you recommend, also what about diversified/Multi Cap funds, any options to go with
        3- Considering my risk appetite what should be % allocation in different funds
        4- Any recommendation on health insurance policies and what should be the ideal coverage amount, considering no pre disease History

        Pankaj Gupta

  13. Hello Mr Basavaraj . Your website is very informative for us. Nowadays there are companies like Aviva, Aegon, IDBI Federal who also offer Termsurance with return of premium option. What is your opinion on these kind of Termsurance policies? How do they compare to pure protection plans like say say HDFC Standard or ICICI Prudential ?

  14. Dear Sir,

    Very Informative / awesome work.. – Hats off

    Can ‘Brother’ and/ Or ‘In-laws’ can make as Nominee ????
    Can I go for two term diff. policies with separate nominee? One is LIC (govt.) and Other one with ICICI or HDFC (low premium purpose)?

    Also want know whether pvt. policies will dig deeply in order reject the policy or not?

    please advise.

    1. Kanthraj-Yes, nomination can be anyone. But nominee will not have rights over the asset. He act like trustee. Let us say you nominated brother and you are married. At the death, your brother will not be owner of that asset. He will act like trustee and the asset distribution will be as per legal heir laws. In that case your wife will be first legal heir.

      1. Thank U sir..

        But i am a widower (lost my wife) few months back…. i am the prime (key person) person to look after my family… i am taking care of my family… i have parents and married younger brother.. Economically weaker.
        So, in this case If something goes wrong to me…

        whether my family (brother / parents / in-laws) will be benefited or not???

        or whether they will be troubled while settling policy… If so, what will be troubled.. please guide me..

          1. Sir, Thank you…

            1. Even my Father-in-law can also claim.. If there are nominee right…?

            2. Sir, You were saying tat… its better to go for only one policy provider (eg: either lic/ pvt. hdfc ICICI etc) But right now i am willing to go for LIC but Already i have default “Life insurance policy” from by Employer (TCS ltd.). so it will be a two policy provider… is it okay?

            3. As you said (other’s querry) all the insurance will be settled (centralised in Europe countries), I have a HDFC international platinum Debit/crdt card even it as a accidental benefit of 5 to 10 lakhs.. whether these will also be considered as Life insurance? and it will come under centralised settlement in europe countries?? please advise.

            sorry for asking more questions.

  15. sir i am paying premium of 36030 year in jeeval saral policy consistently for 5 years including this year 2016.IF i close this policy i suffer loss. Do you think I Should close it and go for LIC Term plan and SIP. My age is 39+. What should i do.

          1. should i make it paid up otherwise their will be loss. Or if closing it is best option then should i complete 5 which in march 2017 or close it now

  16. Respected sir…i am an govt wmployee.plz suggest me. 1. a good company for 50 lakh term insurance and 2. good profitable and death cover long term life insurance policy…I have completed 10 yrs service.i don’t have any plans except pf.

  17. Hello Basu Sir,

    Thank you for sharing such great information. about Best Life Insurance Policy, It is informative.

    I have subscribed to your feed which must do the trick! and Also, I’ve shared your site in my social networks!

    Thanks a lot once again Have a nice day! good luck sir Happy Blogging 🙂

  18. I have a Medical Insurance via my company that I work for . Is it a good idea to take a private HI Policy because if I leave the company I will not be insured and if I try to buy a new one at that time, what if have an illness or Premium is too high as per my age. I am 26 yrs old now.

      1. My family already has insurance. The only I think I should take insurance is because what if have an illness or Premium is too high later on. Do you think I should go for full insurance or topup insurance. Do insurance companies convert a topup insurance to a regular insurance if I have illness?

  19. Dear sir, I take rs. 1CR. Policy online term plan with monthly income plan from hdfc.
    Sir, I listen that now IRDA says after three years of policy purchase the company cannot refuse the claim by any is true , because I am worry that at the time of claim many companies refuse the claim on very small things.
    Thanks in advance.

  20. Is buying a online term plan safe?
    Many friends are cautioning me against this saying that claim settlement may be problematic with online plans.

  21. Hi Basu

    Do interest rates(Repo rates) have effect on PPF? At some point of time in future interest rates would become very low. At that time can Govt. of India can maintain the better interest rate for PPF? Please elaborate on this.

  22. Hi Basu,

    As usual insightful post and easy to understand. I am 32 yrd old with a 3 month old baby. No alcohol and no smoking habit with 75k net monthly salary. I hold no insurance policies. Below is what i am planning to do:

    1. Buy online term insurance of 1 crore for 25 years term. Is it okay to diversify it ? Ex: 50 lakh in icici pru, another 25 lk in HDFC and rest in LIC ? Just to mitigate the risk of “what if one company denies the sum assured to my nominee in future”.

    2. PPF investment – have already started it last year. 50k a year.

    3. Any other Insurance policy if you can advise please. My lic agent uncle is behind me with policies like Jeevan tarun, jeevan anand which doesn’t make any sense to me. Bust is there no decent policy at all in lic apart from term ?

    4. No MFs as i am looking to invest in property soon.

    Hope my planning is decent. I understand its bit late though.

    1. Avinash-Thanks for your words.
      1) Splitting not required and there is no logic in that. What if the rejected insurance company share the information with other insurers as soon they centralised the data point of client? This system is there in Europe countries.
      2) Consider that as debt instrument of your goals.
      3) Refer my above post.
      4) Property investment is illiquid asset. Invest as per your risk.

      1. Great. Thanks for the prompt answer. I am still stuck in a tricky situation.

        Our LIC agent have convinced (brain washed infact) my parents to open Jeevan Tarun policy for their grandson. I refused and instead advised my parents to open a simple TP of 25 lks for 15 yrs with him Or a PPF in my son’s name. But you know they will not listen to me and will eventually call me foolish.

        They are ready to invest 10 k a year for 15-20 yrs in LIC only. So i am thinking to tell them to go for any Whole life insurance policy with limited payment in my name and make my son/wife as nominee. Atleast this will be a “relatively” better option than Jeevan tarun.

        Can you please name any such whole life policy considering 10 k premium for 15 – 20 yrs.


  23. we are very thnkful to u MR. BASU, i followed u on sevral times, almost evrytime, due to ur advice i took term policy, took health policy and now following instructions for mutual funds, and i realize that u r above the thnx and blessings, due to ur kind help nature and what u r doing for society, this comment for ur hard work , just best wishes from my family side, and yes..u r d best..good luck sir

      1. Thanks a lot Basavaraj for sharing all your knowledge with us, we will be thankful to you for ever. I learnt a lot from your posts.

  24. Good afternoon sir once again a very good article on life insurance policies. Sir i have a question i did LIC Jeevan Anand 149 for 21 years and now i am paying 31053 annually in his scheme. I have alreday paid 3 premiums and total sum assured is rs600000. My question is this a good scheme or i will surrendre this scheme. But the agent told after the 21years also the policy is hold good till the person expire….

  25. Dear Sir,

    1. I have LIC Policy of Rs-500000 for 15 years. I have paid three years completely. How much LIC Policy will give return?

    2. I have SBI- Smart Money back policy option 2(Sum assured-6,50,000%) for 15 years. How much return will i get from this policy? I have been Paying premium for last 4 years.


  26. Dear Basu,

    Nice Post.

    As wise person (financial literate) thinks (and it is correct) that Term Insurance is better (or best) than other Life insurance products and do not mix INSURANCE+INVESTMENT then why such a products exists ? or in other way, why central body (i.e. SEBI or IRDA) won’t specify the rules for designing the products ?

    (may be revenue generating from these products matter 🙂 )

  27. Sir,
    My son has turned 18 years in february, 2016. What is the best insurance policy for him? Can u please guide me for taking out a proper policy. Also please enlighten me on Postal Life Insurance. I am a Central Government employee. Thanks
    Srinivasan Gopal

  28. As usual your post is an eye opener for the layman to easily understand the basic definition of Life Insurance. It was your blogs that educated me towards Term Insurance. I m glad I ran into your posts.. Thanks a lot and please continue to educate us.. 🙂

  29. Dear Sir,

    Your article is wonderful.

    I had taken Kotak prefered online term insurance for Rs-3 crore? Is it good company.

      1. Sir,

        Thank you for reply regarding of kotak e-term insurance. I had taken Kotak e-term term insurance upto 60 years old.

        Could you guide me regarding of retirement plan? Whether i have to save money through Mutual fund(SIP Mode) or VPF Mode?

        Please guide me. sir.

          1. Sir,

            Thanks for reply.

            I am Investing Rs-5000?- over SIP in TATA BALANCED FUND last one and half year and April-2106 onwards, I Plan to RS-5000/ – in SBI Pharma fund for my retirement plan. Whether these two funds will give good returns after 10-20 years?


            1. Srinivasan-Avoid sector funds of your choice SBI. Instead select one large cap, small and mid cap and a balanced fund which you are investing. But make sure the proper asset allocation.

Leave a Reply

Your email address will not be published. Required fields are marked *

For Unbiased Advice Subscribe to our Fixed Fee Only Financial Planning Service

Recent Posts