Life Insurance at 20? Sounds Boring—Until You Hear What Happened Next
A surprising story of how early life cover saved my finances—and taught me what schools never did about money.
A Realization Bigger Than Numbers
When I turned 20, I thought I had begun to understand the grown-up world. I was earning ₹15,000 per month from an internship, studying for CFA Level 1, and had even started my SIPs. It felt like I had cracked the code of personal finance. But one evening, while reading an article on risk management, something shifted.
The author asked: "What if you don’t wake up tomorrow? Will your family be okay financially?"
That line echoed in my head like a wake-up call. The thought of my parents trying to manage things financially without me made me uneasy. SIPs were great. But what if my earnings stopped completely one day? Would they be forced to compromise on their lifestyle or take on debt just to make ends meet?
That night, I scribbled in my diary again: “You’ve insured your money. But have you insured your life?”
The Confusion of Cover
The next day, I began my search into the world of insurance. As expected, I was flooded with options, jargon, and conflicting advice.
Life insurance? Health insurance? Riders?
Term vs endowment?
ULIP vs mutual fund?
Critical illness vs accidental rider?
Every website promised “the best” policy. Some plans showed flashy maturity amounts, others screamed tax-saving benefits. It was like walking into a maze with five people shouting in different directions.
So, I went back to the basics.
Insurance, I realized, was not about returns. It was about replacing loss, not wealth, but income. If I were no longer around or hospitalized, would someone else need to fill that financial gap?
That was my real reason to begin.
Understanding Life Insurance
I learned that life insurance wasn’t a modern concept. It dated back centuries when traders pooled money to help the one who lost a ship. That’s all it is - mutual protection against the uncertain.
I broke down the types of life insurance:
Term Insurance: Pure risk cover. Pays your family if you die during the policy term. No maturity benefit.
Endowment Plans: Life cover + savings. Higher premiums, lower coverage.
Whole Life Plans: Coverage for your entire life.
ULIPs (Unit Linked Insurance Plans): Hybrid plans where part goes to insurance, and the rest gets invested.
I’ll admit: ULIPs looked attractive. They promised growth along with protection. But I quickly saw the problem—mixing investment with insurance leads to compromise on both fronts.
So I chose what was best for my age, income, and needs — a Term Insurance Plan.
Picking the Right Term Plan
I used a simple formula I found in a mutual fund whitepaper:
Life Cover = 20×Annual Income + Loans – Assets
My annual income: ₹1.8 lakh → ₹36 lakh basic cover
Added margin for inflation, future responsibilities: I rounded up to ₹1 crore
Many people take ₹10–20 lakh covers just to tick the box. But a ₹10 lakh payout won’t even cover 2–3 years of middle-class expenses.
Don’t underinsure. Under-insurance is like wearing a helmet that doesn’t cover your head.
So, I wanted a ₹1 crore cover. If something happened to me, that would at least provide a safety net for my parents.
But term insurance wasn’t as straightforward as I thought:
Should I opt for 30 years or 40?
What about inflation?
What if I live till the end—won’t I lose my money?
Then I read this: “Term insurance isn’t for you. It’s for the people who depend on you.”
That hit home.
I chose a ₹1 crore term plan for 30 years.
Premium: ₹5,200/year
Provider: A reputed private insurer with 98 %+ claim settlement
Bought online
I also added an Accidental Death Rider (₹25 lakh extra) and a Waiver of Premium Rider - just in case I became disabled and couldn’t continue paying.
When I clicked “Buy,” I didn’t feel rich or wise. I felt responsible.
The Research
Where I Researched:
PolicyBazaar, Coverfox, and Turtlemint: To compare premiums and features.
IRDA Annual Reports: To verify claim settlement ratios and complaint ratios.
YouTube Channels: CA Rachana Phadke, Labour Law Advisor, Invest Aaj for Clarity
Shortlisted Insurers (All had ~98–99% claim ratios):
HDFC Life
Max Life
Tata AIA
ICICI Prudential
I didn't go by just the claim ratio. I also looked at:
Solvency ratio
Time taken to settle claims
Customer reviews on Reddit and Quora
Mobile app experience (for tracking and downloading policy)
Why I Chose a 98%+ Claim Settlement Insurer (And What That Really Means)
When I finally zeroed in on buying term insurance, I kept hearing this line again and again:
“Pick a company with a high claim settlement ratio.”
So, I opened the latest IRDA annual report and started scrolling through the tables.
Almost every major private insurer showed 98 %+ claim settlement ratios. Some had 98.3%, some 98.6%, and even LIC had a 98.74% ratio. It felt like comparing gold to platinum - so close, but does it really matter?
That’s when I dug deeper.
Here's what I learned:
Claim Settlement Ratio (CSR) means the percentage of claims an insurer has paid out of the total claims it received that year. So, 98% CSR means they settled 98 out of 100 claims.
But here’s the real thing nobody tells you:
It doesn’t reflect the claim size — they might have paid many small claims and rejected fewer high-value ones.
It’s based on past data, not a promise for the future.
It doesn't show how fast or easy the process was.
So instead of just blindly chasing 99%, I focused on two extra factors:
Claim settlement process clarity:
I visited Reddit threads, Quora discussions, YouTube interviews, even Telegram finance groups. I looked for stories where people had actually filed claims with different insurers. Some 98.5% insurers had delays, others didn’t.Customer service and family support:
What’s the point of 98% CSR if your family can’t reach someone after you’re gone? I wanted someone who had easy online support, a well-reviewed mobile app, and dedicated helpline numbers for claims.
So yes, I went with an insurer that had 98.2% CSR. But I didn’t choose them because of the number. I chose them because they checked all of these boxes:
Easy online purchase
Transparent documentation
Claim helpline that actually connects
Consistently high CSR over 5 years
Real user stories showing payouts without legal mess
I told myself: “Don’t buy the highest CSR. Buy the best process.”
Because claim settlement isn’t about numbers. It’s about your family, in their hardest moment, not having to fight for what’s already theirs.
While researching these plans, I got to know about the MWP Act,
MWP Act – A Hidden Gem for Women
If you’re married and want your wife or children to receive the money without interference from creditors or relatives, buy life insurance under the MWP Act.
Under the MWP (Married Women’s Property Act):
Money goes only to the wife and/or kids
No one else can claim it
Even you can’t change it later
I made a note to use this in the future.
My Final Selection
Policy Details:
Cover: ₹1 crore
Term: 30 years
Premium: ₹5,200/year
Insurer: Tata AIA (based on app experience, clarity in documentation, and easy onboarding)
Bought via: PolicyBazaar (they offered video KYC + help at no extra cost)
Riders Added:
Accidental Death Benefit: ₹25 lakh
Waiver of Premium: If disabled, the policy continues without paying
Did I add Return of Premium? No.
Why? The premiums jump 8–10x. It's not worth it.
Why I Rejected Endowment and ULIPs
A few relatives were shocked. “No returns? You’re throwing money away!” they said.
But let’s look at the math.
Endowment Plan (Example):
₹1 crore cover
Premium: ₹1.3 lakh/year
Maturity after 20 years: ₹40-50 lakhs
Term Plan + SIP combo:
₹1 crore cover: ₹5,200/year
₹1.25 lakh/year into SIPs at 12% CAGR = ₹80+ lakh in 20 years
Conclusion?
The term plan gives me larger cover
SIP gives me better returns
ULIPs? High charges, low flexibility, and poor transparency. I realized that buying insurance as an investment is a trap.
Even if you did everything right with ULIPs - timed your investment well, selected the right fund, and held it for long - you’d still underperform compared to a mutual fund with a standalone term plan. Why pay for complexity when clarity works better?
What I Plan for the Future
Increase the cover post-marriage or home loan
Add the MWP Act (Married Women’s Property Act) clause to secure funds for spouse
Review riders every 5 years
Possibly use offline advisors for my parents’ plan, only after research
Want to understand better?
Here is a link I used: Things to know before buying a term plan
I’ve uploaded an Excel sheet comparing the best term insurance plans for young earners—coverage amounts, claim settlement ratios, riders, premium comparisons, and entry age limits. Feel free to go through it and pick what secures your future best.
Insurance Is Love in Action
At 20, buying term insurance doesn’t make you wise. It makes you responsible.
Your SIP builds your future.
Your insurance protects your family’s present.
So if a 20-year-old earning ₹15,000/month can insure responsibly, what’s stopping you?