Term insurance first: the boring shield that clears the runway
Dr Ramesh was explaining the difference between a stent and a bypass to a patient's family in his Guwahati clinic when his phone buzzed. A WhatsApp message from his college friend Sunil in Delhi: "Bro, just bought a ULIP. ₹50,000 premium. Insurance plus investment. Smart, no?"
Ramesh replied after the consultation, with a question Sunil did not expect: "What is the death benefit?"
Sunil checked. ₹5 lakh.
"And your annual income?"
"₹18 lakh."
"So if something happens to you tomorrow, your family gets five lakhs. That is three and a half months of your income. Your daughter is in Class 3. She has fifteen years of education ahead. Your wife does not work. And your family gets three and a half months."
The typing indicator appeared and disappeared several times. Then: "Oh."
The runway analogy
I use this image with every new family at Dhansanchay: imagine your financial life as an aeroplane. The SIPs are the engines. The step-up is the fuel management system. The portfolio review is the navigation. All of these build wealth, create momentum, move the family forward.
Term insurance is the runway. Not exciting. Not visible once you are airborne. But without it, the aeroplane does not take off. It does not taxi. It does not exist.
If the primary earner is not here tomorrow, every other financial plan — every SIP, every step-up, every education corpus, every retirement target — depends on one question: is there enough money to keep the family's life intact for the next fifteen to twenty years without that income?
Term insurance is the only product that answers that question affordably. A thirty-year-old professional can secure ₹1 crore of cover for roughly ₹10,000-12,000 a year. That is less than ₹1,000 a month. Less than the phone recharge. Less than one dinner at Flavours. For that sum, the family has a shield against the single most devastating financial scenario they could face.
Sunil's ULIP gave him ₹5 lakh of cover for ₹50,000 a year. A term plan would give him ₹1 crore of cover for ₹12,000 a year. The remaining ₹38,000, invested in a diversified equity SIP, would almost certainly build more wealth over twenty years than the ULIP's investment component.
(Illustrative. Actual premiums depend on age, health, sum assured, insurer, and policy terms.)
My father's first lesson
I did not learn this from a textbook. I learned it from watching my father, Sukhmal Chand Jain, who has been a Life Insurance Corporation agent in Tinsukia since 1 August 1974. Fifty-one years.
The first thing he taught me about insurance was not about products. It was about sequence. "Protection first," he said. "Wealth-building second. If the family is not protected, the wealth is built on sand."
He has seen what happens when the sequence is reversed. Families with ₹30 lakh in mutual funds and ₹3 lakh in life cover. Families with four endowment policies — ₹2.5 lakh in annual premiums — and a total death benefit that would not fund two years of household expenses. Families where the husband has insurance and the wife does not, even though the wife manages the household and her absence would create costs — childcare, domestic help, logistics — that the husband's income alone cannot absorb.
The protection conversation is not pleasant. Nobody wants to discuss what happens when they are not here. My father has had this conversation thousands of times. He does not enjoy it. But he has it — because the families who had it are protected, and the families who avoided it are not.
The HLV question
Human Life Value — HLV — is the calculation that tells you how much cover your family actually needs. It sounds cold. It is one of the most caring calculations a family can do.
Take your annual income. Subtract what you spend on yourself — roughly thirty to forty percent. The remainder is what your family depends on from your earnings each year. Multiply that by the number of working years remaining. Adjust for inflation. The result is the rupee value of your earning capacity to the people who depend on it.
For a thirty-five-year-old professional earning ₹15 lakh, with twenty-five working years ahead, the HLV is typically ₹2-3 crore. Most families hold cover of ₹20-50 lakh. The gap is enormous — and invisible until the day it matters.
At Dhansanchay, we calculate HLV in the first review. Not as a sales exercise — we have no ULIP to push, no endowment plan to close. As a diagnostic. Because until the family knows the number, every insurance decision is a guess. And guesses, when it comes to protection, are a luxury the family cannot afford.
The Dhansanchay doctrine: shield first, then build
We do not start with mutual funds. We start with a question: if the primary earner is not here tomorrow, can the family maintain its life for the next fifteen years?
If the answer is a clear yes — adequate term cover, health insurance, emergency fund in place — we move to wealth-building. SIPs, step-ups, goal mapping, the whole framework.
If the answer is anything less than a clear yes, we fix the protection first. Every rupee spent on a SIP before the family is adequately insured is a rupee building a house without a foundation.
This is the Integrity in our three I's. We would rather you spend ₹12,000 a year on a term plan and ₹38,000 on a SIP — total ₹50,000 — than ₹50,000 on a ULIP that provides neither adequate cover nor competitive investment returns. That recommendation costs us the higher commission a ULIP would generate. We make it anyway. Because the family's safety is not a negotiable variable.
Sunil, after that WhatsApp conversation with Ramesh, called us. He now has a ₹1.5 crore term plan, adequate health cover, and the remaining premium budget redirected into a SIP. His daughter is in Class 5 now. The runway is clear. The aeroplane is in the air.
Written for general education — not as individual investment, tax, or legal advice. Insurance needs are personal — consult a qualified advisor for your specific situation.