Life
Term Insurance Basics: What It Is and How Much Cover to Consider
Term insurance is the simplest form of life cover. Getting the amount and term right matters more than anything else.
Term insurance pays a fixed amount — the sum assured — to your nominee if you die during the policy term. If you survive the term, a pure term plan typically pays nothing. That is why premiums are lower than most other life insurance for the same cover.
Who needs it
Anyone whose income supports others: a spouse, children, parents, or a loan that would otherwise fall on the family. If nobody depends on your income, the need is lower.
Thinking about the cover amount
Rather than using a single multiplier, build it up from your family's actual needs:
- Outstanding loans such as a home loan
- Future goals such as children's education
- Several years of household expenses your family would need
- Minus existing life cover and investments your family could use
Choosing the policy term
Cover should last as long as people depend on your income — commonly until retirement or until your youngest child is independent and major loans are repaid.
Common mistakes
- Choosing cover based only on the premium you want to pay
- Not disclosing health conditions, smoking or existing policies
- Relying solely on employer group life cover, which usually ends with the job
- Not telling the family that the policy exists or where documents are kept
Disclosure is critical. The insurer accepts the risk based on your declarations; incorrect information can lead to disputes at claim time.
This guide is for general information only and is not advice on any specific policy. Policy terms vary by insurer and product — always read the policy wording.
