Life Insurance

Life insurance is a contract where you pay a premium and the insurer pays your nominee a fixed sum assured if you die during the policy term. Some plans also pay out on maturity.

The real question is how much cover your family needs and whether you want pure protection or a plan that mixes insurance with investment. We think protection should come first, usually through a term plan, with investing kept separate.

Here we explain it in plain language, the way we would explain it to a friend. Every guide uses rupee examples and links to tools so you can check the maths yourself. We do not sell insurance or rank insurers.

New to insurance? Start with What is Life Insurance. Not sure how much cover? Read How Much Should I Invest in Life Insurance.

Key Highlights

Tax on premiums: under the old regime only, premiums can be deducted within the ₹1.5 lakh limit: section 80C (1961 Act), now section 123 read with Schedule XV of the Income-tax Act, 2025 (Income Tax Dept, Schedule XV). The default new regime does not allow this deduction.
Tax on maturity: section 10(10D) (1961 Act) now sits in section 11 read with Schedule II (Sl. No. 2) of the Income-tax Act, 2025. Maturity proceeds stay exempt only if the yearly premium is within a set share of the sum assured: 20% for policies issued between 1 Apr 2003 and 31 Mar 2012, 10% for policies issued from 1 Apr 2012, and 15% for policies issued from 1 Apr 2013 that cover a person with a disability or a specified illness. On top of that, the exemption is lost if aggregate annual premium exceeds ₹5 lakh (non-ULIP policies issued on or after 1 Apr 2023) or ₹2.5 lakh (ULIPs issued on or after 1 Feb 2021). Death benefits stay exempt.
No GST on individual policies: individual life insurance premiums have been GST-exempt since 22 Sep 2025 (CBIC Notification No. 16/2025-Central Tax (Rate), 17 Sep 2025). Group policies still attract 18% GST.
30-day free-look period: you can return a life policy with a term of one year or more within 30 days of receiving the document (IRDAI Master Circular on Life Insurance Products, 12 Jun 2024). Complaints go to the insurer first, then Bima Bharosa and the Insurance Ombudsman.

Start with these guides

Start here
What is Life Insurance? Benefits, Types of Policies and 2026 Tax Rules

The main policy types, their benefits and the new tax sections.

Guide
How Much Should I Invest In Life Insurance?

Work out your cover in rupees, not guesses.

Compare
Term Insurance vs Life Insurance

Pure protection or a savings plan, and what each costs you.

Guide
What is Whole Life Insurance?

Cover up to age 99 or 100, and who it actually suits.

Calculators and rates

SIP Calculator

See what the premium you save by choosing term over an endowment plan could grow to.

Goal-Based SIP Calculator

Find the monthly SIP needed to fund a goal, such as your child's education, separately from your cover.

CPI Inflation India

Latest inflation data to help you inflate future goals before you size your cover.

How much cover? A worked example

The figures below are illustrative only, for a 32-year-old earning ₹12 lakh a year. Swap in your own numbers. The method: replace 10 to 15 years of income, add loans and future goals, then subtract cover and liquid savings you already have. See how we calculate.

Line	Illustrative example: age 32, income ₹12 lakh a year
Income replacement (10 to 15 × annual income)	₹1.2 crore to ₹1.8 crore
+ Outstanding loans (home loan)	+ ₹40 lakh
+ Future goals (child's education, already inflated)	+ ₹25 lakh
− Existing cover and liquid assets	− ₹30 lakh
= Suggested cover	≈ ₹1.55 crore to ₹2.15 crore

Premiums depend on your age, health, habits, term and insurer, so get dated quotes for your own profile before you compare plans.

Frequently asked questions

Is term insurance better than an endowment or LIC-type savings plan?

For pure protection, usually yes. A term plan buys a large cover for a small premium because it pays only on death. Endowment and money-back plans combine cover with savings, so the same premium buys much less cover and the returns are typically modest. Many families do better with a term plan plus separate investing. Compare both in our term vs life insurance guide, or compare term insurance plans and riders.

How much life insurance cover do I need?

Enough to replace your income for your dependants and clear what you owe. A common starting point is 10 to 15 times your annual income, plus outstanding loans and big future goals such as a child's education, minus existing cover and savings. Review it after marriage, a home loan or a new child. Our cover sizing guide walks through the steps.

Is the life insurance maturity amount taxable in 2026?

It can be. Death benefits are tax-free. Maturity proceeds are exempt only if the premium stays within 10% of the sum assured (15% for cover on a person with a disability or specified illness, 20% for policies issued before 1 April 2012) and total annual premium is within ₹5 lakh for non-ULIP policies issued from 1 April 2023 (₹2.5 lakh for ULIPs issued from 1 February 2021). See our life insurance guide.

Can I claim life insurance premium under the new tax regime?

No. The deduction for life insurance premiums, once section 80C and now section 123 of the Income-tax Act, 2025, is available only if you choose the old regime, within the overall ₹1.5 lakh limit. The new regime has lower slab rates but drops most such deductions. Compare both regimes in our tax guides.

What is life insurance and how much cover should I take?

Life insurance is a contract: you pay a premium, and if you die during the term, the insurer pays your nominee a fixed sum assured. Take enough cover to replace your income for your family and to clear your loans and fund your children's goals. A common starting point is 10 to 15 times your annual income. Work out your own number with our cover guide.

Expert take: Ashutosh Joshi

"Buy protection and investment separately. For most earning parents I suggest a pure term plan of roughly 10 to 15 times income, running until your loans are paid off and your dependants' big goals are funded. Then put the premium you save compared with an endowment plan into a SIP. Review your cover whenever life changes: marriage, a home loan or a new child. I explain how to size it in my life insurance cover guide."

Ashutosh Joshi, PGDM (Finance), B.Com, founder of Diving Finance

Updated: 23 October 2026. Sources: Income Tax Department, Income-tax Act, 2025 (section 123, Schedule XV and Schedule II); CBIC Notification No. 16/2025-Central Tax (Rate) (17 Sep 2025); IRDAI Master Circular on Life Insurance Products (12 Jun 2024). This page is educational, not personalised advice.