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1 crore term insurance vs lower sum assured policies


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Term insurance plans are important when it comes to financial planning. A “1 crore term insurance” policy stands out as a major decision for many among the different possibilities available, especially considering the growing cost of living and inflation. Lower sum assured plans, on the other hand, while providing less coverage, are also a realistic alternative for a segment of the population. The choice between these two forms of term insurance plans can have a substantial influence on a person’s financial planning.

The significance of a 1 crore term insurance policy

1 crore term insurance policy provides extensive coverage that can protect the policyholder’s family’s financial future in the event of unanticipated situations. In a nation like India, where family is frequently the major priority, such a policy assures that their dependents are not burdened by financial troubles in the case of the policyholder’s premature death. This fund can be utilised to cover critical expenses such as debt repayment and children’s higher education, as well as to maintain one’s lifestyle.

Opting for lower sum assured policies

Lower sum assured policies, while offering less coverage, are more affordable and can be a good starting point for those with a limited budget or lower income. Such policies can still endow a safety net and can especially be enticing to individuals who have lesser financial liabilities or have other assets.

Distinctions between 1 crore term insurance and lower sum assured policy

Premium cost

A 1 crore term insurance policy’s premium is often higher, reflecting the considerable coverage it provides. This is in contrast to lower sum assured plans, which have cheaper premiums but give less coverage. The premium is decided by characteristics such as the insured’s age, health, and lifestyle.

Coverage amount

In the case of the policyholder’s death, a 1 crore term insurance policy pays a sum promised of Rs 1 crore to the nominee. This hefty sum guarantees that critical financial demands, such as children’s education or mortgage obligations, are met. Lower sum assured policies, with their smaller coverage, may not sufficiently cover such extensive financial obligations.

Target audience

High coverage plans, such as 1 crore term insurance, are designed for those who have considerable financial commitments, such as dependents, big debts, or greater living expenditures. These plans are suitable for those who need to provide considerable financial support to their family while they are away.

Policy term

Policies with higher sum assured often come with longer-term options. This means the policyholder can enjoy coverage for an extended period, often up to retirement age or even beyond, ensuring long-term security.

Financial security

A 1 crore term insurance policy provides full financial stability due to its huge payment. It assures that, in the case of the policyholder’s death, their family will be able to maintain their quality of living, pay off debts, and accomplish future financial goals without sacrificing their standard of life.

Eligibility criteria

Applicants for a 1 crore term insurance policy frequently face more strict eligibility checks, including extensive medical tests. The bigger the coverage amount, the greater the risk to the insurer.

Tax benefits

Both 1 crore policies and lower sum assured policies offer tax benefits under Section 80C of the Income Tax Act. However, the impact is more pronounced with a 1 crore policy due to the higher premium paid, which translates into a larger tax deduction.

 Riders and benefits

High-sum assured policies frequently offer additional riders and benefits, for instance critical illness coverage, accidental death benefits, and disability riders. These add-ons provide more comprehensive protection but at an additional cost.

Suitability for liabilities

A 1 crore term insurance is particularly suitable for individuals with high liabilities, such as a substantial home loan. The policy ensures that in case of the policyholder’s demise, significant debts can be settled without burdening the family.


Lower sum assured policies often provide more flexibility in payment options and terms. This can include variable premium payment periods, shorter term lengths, and the possibility of adjusting the cover amount.

Risk cover

Higher sum-assured policies offer better coverage for lifestyle-related risks, such as diseases or accidents that might be more prevalent among certain demographics or lifestyles.

 Claim settlement ratio

This ratio might differ between high and low sum assured policies. Insurers offering high sum assured policies might have a stricter claim settlement process due to the larger amounts involved.

Inflation adjustment

A 1 crore policy is more apt to counter the future impact of inflation, ensuring that the sum assured remains substantial even years down the line.

Policy surrender value

The surrender value, or the amount you get on terminating the policy prematurely, varies significantly between a high sum assured policy and a lower one, usually being higher in 1 crore policies.

Age factor

The premium for a 1 crore policy is highly dependent on the age of the policyholder at the time of purchase. The younger the individual, the lower the premium, generally due to lower associated risks.

Customer segment

High-sum assured policies target a different customer segment, often catering to individuals with higher incomes and greater financial responsibilities, in contrast to lower-sum assured policies, which target a broader base.

Ease of purchase

Lower sum assured policies are often easier to purchase, requiring less stringent underwriting processes. This makes them more accessible to a wider range of individuals.

Market investigation

Given the diversity of alternatives available and the bigger financial commitment needed, purchasing a 1 crore insurance normally necessitates a more comprehensive market study.


The choice between a 1 crore term insurance policy and a lower amount assured coverage is about more than simply price. It’s a decision that involves a thorough examination of one’s financial obligations, future goals, and the financial security of dependents. While a 1 crore insurance policy gives full coverage and peace of mind, a policy with a lower guaranteed value may be a preferable alternative for persons with limited expectations or economic constraints. Finally, the optimal selection is one that matches with the individual’s specific financial situation and long-term goals.



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