Discovery: Term Insurance Calculator (India)

JTBD

“How much term insurance do I actually need, and what will it cost me?”

Market Context (FY 2025-26)

What Is Term Insurance?

• Pure life cover — pays death benefit (sum assured) to nominees if policyholder dies during term
• No maturity benefit — if you survive the term, nothing is returned (unlike endowment/ULIP)
• Cheapest form of life insurance in India — 100% of premium goes toward mortality risk
• Recommended by virtually all financial planners: “Buy term, invest the rest”

Cover Sizing Methods

1. Income Replacement Rule: 10-15x annual income + outstanding liabilities
   • Quick, widely used, but does not account for salary growth or inflation
   • Example: ₹15 L income → ₹1.5 Cr to ₹2.25 Cr cover
2. Human Life Value (HLV): Present value of future income minus personal expenses
   • HLV = Σ [(Salary × (1 - Personal%) × (1 + g)^t) / (1 + d)^t] for t = 0 to retirement
   • More precise, recommended by IRDAI and financial planners
   • Typical inputs: salary growth 7-10%, personal expenses 25-35%, discount rate 6-8%

Premium Benchmarks (March 2026, Non-Smoker Male, ₹1 Cr, 30yr term)

• Age 25: ₹7,000 - ₹11,000/year
• Age 30: ₹8,000 - ₹14,000/year (~₹700-₹1,200/month)
• Age 35: ₹12,000 - ₹20,000/year
• Age 40: ₹17,000 - ₹28,000/year
• Age 45: ₹26,000 - ₹43,000/year
• Age 50: ₹39,000 - ₹65,000/year
• Female discount: ~15-20% lower than male
• Smoker loading: ~80-100% higher than non-smoker

Tax Benefits

• Section 80C: Premium deductible up to ₹1,50,000/year (old regime only)
  • Shared with EPF, PPF, ELSS, home loan principal, etc.
  • Max tax saving at 30% slab + 4% cess: ₹46,800/year
• Section 10(10D): Death benefit is 100% TAX-FREE
  • Condition: Sum assured must be ≥ 10x annual premium
  • For term plans this is always satisfied (cover is typically 500x+ premium)
• Section 80D: Riders (critical illness, accidental death) may qualify for additional 80D deduction up to ₹25,000/₹50,000

GST (Major Change Sep 2025)

• From 22 September 2025: 0% GST on ALL individual life insurance premiums
• Previously: 18% GST on term insurance premiums
• Saving: ₹1,800 per year on a ₹10,000 premium policy
• Group life insurance: still 18% GST
• Source: Department of Financial Services notification, GST 2.0 reform

IRDAI Regulatory Updates (2025-26)

• Sabka Bima Sabki Raksha Act, 2025: Amends Insurance Act 1938 and IRDA Act 1999, effective 5 Feb 2026
• Perpetual registration: IRDAI moved to perpetual licenses for intermediaries (no 3-year renewal)
• Waiting period cap: Pre-existing condition exclusions capped at 3 years (down from 4)
• No upper age mandate: Insurers must offer at least one product with no upper age limit
• Premium stability: Once fixed for a term, premium cannot be increased during that term

Major Insurers (Reference)

• LIC (e-Term), HDFC Life (Click 2 Protect Life), ICICI Pru (iProtect Smart)
• Tata AIA (iRaksha TROP), Max Life (Smart Secure Plus), Bajaj Allianz (eTouch)
• SBI Life (eShield Next), Kotak Life (e-Term), PNB MetLife (Mera Term Plan Plus)

Calculator Tabs

Tab 1: How Much Cover?

• Inputs: annual income, age, retirement age, dependents, home loan, existing cover
• Calculation: 12x income × dependent multiplier + loans - existing cover
• Output: Total cover needed + additional cover gap + 10x/15x quick reference

Tab 2: HLV Method

• Inputs: salary, growth rate, personal expenses %, years to retirement, discount rate
• Calculation: Present value of future family income stream
• Output: HLV value + year-wise PV breakdown + comparison with income multiplier

Tab 3: Premium Estimate

• Inputs: cover amount, age, gender, smoker, term, tax slab
• Calculation: Interpolated from insurer rate cards (low/mid/high range)
• Output: Annual premium range + monthly equivalent + 80C tax saving + effective premium + age-wise curve

Sources (All Verified March 2026)

• IRDAI (irdai.gov.in) — regulatory framework, insurer registration
• Income Tax Department (incometax.gov.in) — Section 80C, 10(10D) rules
• Department of Financial Services (financialservices.gov.in) — GST 0% notification
• HDFC Life, ICICI Pru, Tata AIA, Max Life — published rate cards/calculators
• Policybazaar, ClearTax, Ditto Insurance — market data, premium benchmarks
• Chambers & Partners Insurance & Reinsurance 2026 India guide
• Grant Thornton Bharat — Insurance regulatory updates Jan-Jun 2025