Why Term Insurance Is Boring but Still the Best Choice
If you ever went online to buy term insurance, chances are you didn’t come back with just a term plan. Somewhere in between, a friendly agent probably told you about a “magical product” that gives insurance, investment, returns of 14%, and peace of mind—all in one.
Sounds perfect, right?
Well, not exactly.
This blog is about cutting through that confusion. We’ll talk about what term insurance really is, why ULIPs are pushed so hard, and who actually makes the most money from these products. No complicated formulas, no fine print decoding—just simple logic, real numbers, and a bit of common sense.
If you want to protect your family and make smart money decisions without falling for fancy names and sales pitches, you’re in the right place.
Term Insurance: No Drama, Just Protection
Term insurance, in simple words, is giving a surety to your loved ones that even if you die, they will miss you—but their life is secured. They will be able to live the same lifestyle whether you are there or not. Basically, you will not get any benefits from term insurance; it is meant for your family. It is purely a risk management tool between life and death.
Now, a question comes to your mind: What if I survive till 60—will I get my money back?
The answer is No!!
And here comes the clever agent with magical products like ULIP.
“Sir, with just a little extra, you will not only get term insurance, but your money will also be invested and you will get returns too.”
Just wait here—we will discuss why this magical product does magic only for insurance companies and agents
ULIP: Magical for Agents, Expensive for You
I will come directly to the point: why is the agent suggesting a ULIP product, or in newer terms, a “market-linked capital guaranteed product”?
First of all, the commission for selling this magical product is between 30–45%, which is extremely high compared to a term plan.
Then they will say that you will get returns of 14% annually, which is not exactly true. You will also get only around 20% life cover compared to a term plan, which I will explain later in another blog.
They will tell you, “Sirrr, you are going to make a good amount of money.”
But in reality, the only person who is guaranteed to make money is the agent himself.
At the end of this blog, I will also show you the approximate commission agents can earn by selling ULIP and term insurance products.
Why Term Insurance Is About Family, Not Returns
So let’s get back to the point again: why did we come to buy term insurance?
The sole purpose of insurance is to mitigate risk.
Yes, you buy life insurance for the financial well-being of your family. For yourself, as long as you are earning, you can invest or enjoy that money wherever you want.
Term insurance is for your family, not for you, so don’t think about returns here.
For returns you should consider stocks or mutual funds
Reality check of Term vs ULIP ?
I am taking the case details as most common or the idle edge when people usually buy terms.
Parameter | Details |
Age | 27 years |
Gender | Male / Female |
Occupation | Salaried |
Annual Income | ₹10–15 lakh |
City | Mumbai |
Cover Till Age | 60 years |
Term Insurance
I have compared the results from multiple online platforms and taken the average premium from the best available products, as far as I was able to compare. I have considered a sum insured of ₹1 crore.
Also, don’t confuse term insurance with premium return plans—they are different, as I have observed even in pure term plans. Some term plans offer premium return on early exit, typically around the age of 53–56. However, these are still pure term products; the premium return is just an add-on.
On the other hand, pure premium return plans are different. They usually come with almost double the premium compared to a standard term plan.
Parameter | Value |
Entry age | 27 years |
Sum assured | ₹1,00,00,000 |
Policy type | Pure term insurance |
Monthly premium | ₹750 |
Annual premium | ₹9,000 |
Policy tenure (assumed) | 33 years (till age 60) |
Total premium paid (33 yrs) | ~₹2.97 lakh |
Maturity value | ₹0 |
Payout on death | ₹1 Crore (any time during term) |
ULIP [ Market linked products ]
These results are the average of the best products I came across. Usually, the best ones are offering or claiming returns of around 14% per annum, and I have calculated the results based on that assumption only.
Parameter | Value |
Entry age | 27 years |
Product type | ULIP / Market-linked capital plan |
Monthly premium | ₹15,000 |
Annual premium | ₹1,80,000 |
Premium payment term | 10 years |
Total premium paid | ₹18,00,000 |
Policy term / maturity | 20 years |
Lock-in | 5 years (practically illiquid till maturity) |
Life cover | ~₹20,00,000 |
Fund type | Equity-oriented (market linked) |
Agent Commissions [ lets see the magic of magical product ]
Yes, as promised, here comes the commission structure of these products. By showing the commission here, first of all, I am not saying that agents are doing any crime, and I don’t want to discourage them. They are also doing their job, and they will naturally try to sell the products that earn them better profits. In the end, that’s how the business industry works.
So yes, the agent is doing well. He has taken a term plan for himself and is selling you the ULIP. He is taking care of his own responsibilities as well. Now it’s your turn to make the smart move.
Term plan Commission
Year | % of Annual Premium | Agent Earnings |
Year 1 | 20–25% | ₹1,800 – ₹2,250 |
Year 2–5 | 2–5% | ₹180 – ₹450 / year |
Year 6+ | Nil / negligible | ~₹0 |
ULIP plan commission
Year | % of Annual Premium | Agent Earnings |
Year 1 | 30–45% | ₹54,000 – ₹81,000 |
Year 2 | 5–10% | ₹9,000 – ₹18,000 |
Year 3 | 3–5% | ₹5,400 – ₹9,000 |
Year 4–5 | 2–5% | ₹3,600 – ₹9,000 / year |
Year 6–10 | Nil / very low | ~₹0 |
Conclusion: Boring, Simple, and Effective
Let’s end this in a very simple way.
Term insurance is boring because it does not give you returns, bonuses, or fancy stories. It does only one job—protect your family if something happens to you. And that is exactly why it works so well.
ULIPs and market-linked insurance products look attractive because they mix insurance and investment together. But in reality, they give low life cover, lock your money for years, and mostly benefit agents and insurance companies. The returns they talk about are not guaranteed, but the commissions are.
If you survive till the end of your term plan and get nothing back, that is not a loss. It simply means you stayed alive and your family never had to use the insurance. That is success.
So keep it simple:
- Buy term insurance only for protection
- Do investments separately for wealth creation
- Don’t mix emotions, returns, and insurance in one product
Term insurance is boring.
But boring keeps your family safe.
And in personal finance, boring is smart.
You can check out the other investment blogs as well.
How to Create a Perfect Financial Plan for 2025
we are soon coming with financial planning 2026
Simple steps to Select the best Stocks
Which is Better for You: Dividend Investing or Value Investing?
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