Wrote on 19 July 2012
Nice article. I think Life Insurance (LI) as a product is a push-product and not a pull-product, meaning that since people dont buy (uninsured) or buy little (underinsured), it has to be sort of forcibly sold. LI is also a very profitable business, specially in the Bancassurance channel, where Banks sells insurance products.
My suggestion for LI buyers: (1) calculate your monthly income (say X), (2) multiply by 2 (=2X), (3) calculate the amount required to be put in a bank fixed deposit which will generate a monthly income of 2X, (4) the amount as calculated in (3) needs to be your sum insured (amount paid to nominee on your death), (5) compare among different LI companies and buy a pure term policy with the sum insured, with the least premium, (6) continue paying premium, (7) after every 5 years or so, re-do the entire excercise from (1) to (7).
This is what I have done and am insured for Rs.50L for an annual premium of Rs.11000 approx.