ET Now Exclusive: Bandhan Life CEO shares importance of term insurance. 7 Must-Know Facts Before You Buy

In an exclusive interview with ET Now Swadesh, Satishwar B., MD & CEO, Bandhan Life Insurance, shares valuable insights on various aspects of term insurance.

Following the government's removal of the 18 per cent GST on insurance premiums, many are wondering whether life insurance will become cheaper, whether more people will buy policies, and whether insurance penetration will increase in India. In an exclusive interview with ET Now Swadesh, Satishwar B., MD and CEO of Bandhan Life Insurance, shared valuable insights on various aspects of term insurance.

GST Removal and Its Effect on Insurance Penetration 

Speaking exclusively on the ET Now Swadesh show, Satishwar highlighted the GST removal and its effect on insurance penetration, saying, "It will definitely help us reach the government's goal of 'Insurance for All by 2047.' This step will make insurance more affordable and accessible."

Policy Cancellation Due to Health Reasons 

Satishwar clarified that policy cancellations due to health reasons are rare and usually occur in extreme cases, such as non-disclosure of health issues. "Such cancellations are very rare and usually happen only in extreme cases, like non-disclosure of health issues. Normally, underwriting (which checks health, income, and identity) is done before the policy is issued. If a policy is cancelled after issuance, the insurer will provide valid reasons," he added.

Underwriting and Health Checks Based on Age 

He explained that underwriting focuses on three key aspects: identification, current income, and health. The extent of health scrutiny may increase with age due to higher risk. "Underwriting mainly focuses on three things — identification (to verify the person applying is genuine), current income (to decide how much cover can be offered), and health (to ensure the person is healthy enough for coverage). The amount of health scrutiny may increase with age because older applicants are at higher risk. But income and identity checks remain important regardless of age," he said.

Educational Qualification and Insurance Eligibility 

Satishwar said that education level is not the only criterion for eligibility for term insurance. The primary factors are current income and health. "Education alone is not a standalone criterion. The main factors are current income and health. Education may indicate longevity, but it’s not a reason by itself to accept or reject an application."

Encouraging Millennials to Buy Term Insurance 

Many young people avoid buying term insurance because they don’t like thinking about death or consider it unlucky. How can insurance companies attract millennials to buy term insurance? While answering this question, he said, "This is a big challenge because no one likes talking about death. The key message should be that term insurance is for your family’s financial security, not for yourself. If you are the earning member, the policy ensures your family is protected if something happens to you. It’s important to understand that life is uncertain, and insurance provides peace of mind,"

How Much Term Insurance Should One Buy? 

He advised that term insurance coverage should be 20-25 times annual income for young individuals (25-30 years old) and 10-15 times for those around 40 years old. He suggested a simple formula to estimate coverage needs - (60 - age) x annual income.

Starting Term Insurance Along With Wealth Creation and Annuity Products for Retirement 

He further recommended buying term insurance until sufficient wealth is created, while starting wealth creation through regular investments and disciplined savings. He explained that annuity products provide a steady income stream for life, offering mental peace and financial security in retirement. 

Satishwar concluded with saying it would help smaller insurance companies reduce compliance burdens and investment requirements while balancing customer protection. While these insights provide valuable guidance for individuals considering term insurance and highlight the importance of understanding insurance products and regulations.