Five crores sounds massive. Most people think this coverage is only for ultra-rich families.
Not true anymore.
High-earning professionals and business owners often need this much. Let’s see if you’re one of them.
Who Actually Needs 5 Crore Coverage?
Don’t buy just because the number sounds impressive. Calculate first.
You might need a 5 crore term insurance if:
Your annual income is above 30 lakhs. You have multiple property loans totalling over 1 crore. Your children plan to study abroad – costs 50 lakhs per child. You live in expensive cities with high lifestyle costs.
If your yearly expenses cross 15 lakhs, think about it. Multiply that by 15 years. Already 2.25 crores just for living expenses.
Add loans, education, and medical buffer. Five crores makes sense suddenly.
What It Actually Costs
The premium isn’t as scary as you’d think.
- For a 30-year-old healthy person: Men pay: Around 50,000-60,000 yearly, Women pay: Around 38,000-45,000 yearly
- For a 35-year-old: Men pay: Around 75,000-85,000 yearly Women pay: Around 55,000-65,000 yearly
- For a 40-year-old: Men pay: Around 1.2-1.4 lakhs yearl,y Women pay: Around 90,000-1.1 lakhs yearly
Expensive? Yes. But if your income is 40 lakhs yearly, spending 1 lakh on protection is just 2.5%.
That’s reasonable, actually.
Why Term Life Insurance Comparison Matters
For high coverage like 5 crores, the term life insurance comparison matters because the premium differences between companies become huge.
Company A charges 65,000 yearly. Company B charges 58,000 yearly. Same coverage. Seven thousand difference annually. Over 25 years, you save 1.75 lakhs just by comparing properly.
Never buy from the first company you check. Always compare at least six options.
Key Factors to Compare
Don’t just look at the premium amount. Check these carefully:
- Claim settlement ratio: For 5 crore claims, companies scrutinise heavily. Pick one with a ratio above 97% ratio.
- Claim processing speed: Some settle in 7 days. Others take months. Your family needs money fast during a crisis.
- Medical requirements: What tests do they need? Some companies ask for extensive screening at this coverage level.
- Sum assured options: Can you increase to 7 or 10 crores later if needed?
- Rider availability: What additional covers can you add?
Make a comparison sheet. Write all details. The decision becomes clearer.
Medical Screening is Intensive
For 5 crore coverage, expect thorough health checks.
Basic tests plus:
- Detailed blood work, including liver and kidney functions
- Comprehensive cardiac tests, including stress ECG
- Chest X-ray
- Sometimes ultrasound
- Sometimes, the TMT (treadmill test)
These tests cost 8,000-12,000 rupees typically.
Any health issues found? Premium increases or the application gets rejected.
Be prepared for this. Can’t avoid it at this coverage level.
Income Proof Requirements
Companies want solid proof that you actually earn enough to justify a 5 crore term insurance.
Salaried people need:
- Last 3 years ITR
- Form 16
- Salary slips for 6 months
- Bank statements showing salary credits
Business owners need:
- Last 3 years ITR
- CA certified financials
- Business bank statements
- GST returns
- Company registration documents
More coverage means more documentation. Keep everything ready before applying.
Riders That Make Sense
At 5 crore coverage, certain riders become more relevant.
- Critical illness rider: Add 50 lakhs to 1 crore. If you get cancer or a heart attack, this money helps with treatment without touching family savings.
- Accidental death benefit: Get an additional 2-3 crores if death is accidental. Costs relatively little.
- Waiver of premium: If you become critically ill, the company waives future premiums. Policy continues without payment.
Each rider increases the premium by 5-15%. But adds significant value. Consider carefully.
Comparing Different Companies
Let’s look at a real term life insurance comparison scenario.
- Company P: Premium: 62,000 yearly Claim ratio: 98.2% Processing time: 7-10 days Riders available: All major ones
- Company Q: Premium: 55,000 yearly Claim ratio: 94.8% Processing time: 20-30 days Riders available: Limited
Company Q is cheaper by 7,000. But lower claim ratio and slower processing.
Over 25 years, you save 1.75 lakhs. But risk claim hassles during actual need.
Worth it? Most experts say no. Pay extra for reliability at this coverage level.
Tax Implications
Premium qualifies for Section 80C deduction. But the limit is only 1.5 lakhs per year.
If you pay 1 lakh premium, the full amount gets deducted if you pay 2 lakhs, only 1.5 lakhs counts.
So tax benefit maxes out. Don’t expect huge savings here.
The death benefit to the family is completely tax-free, though. Five crores come to them without any deduction.
That’s valuable.
The Real Question
Is 5 crore coverage worth it? If your family genuinely needs this protection – absolutely yes.
Calculate your family’s actual needs. Compare companies properly. Check if the premium fits comfortably in the budget. Then decide. Logic should drive this. Not emotion or comparison with others.
Just make sure you’re choosing the right company through proper term life insurance comparison. And make sure you can afford it for the full policy term. That’s all that matters, really.
