A term policy is excellent if you are looking to merely cover yourself. It is undoubtedly the cheapest way to high insurance cover. But does that mean you would not invest anywhere else? No. You will invest for not only tax saving to also to let it grow over a period of time. Let us look at numbers then: A term plan of say Rs.12Lac for age 30 and tenure of 25 years will have a premium of about Rs 4500 p.a. Say he invested another Rs. 14,000 p.a. in an instrument yielding 8% tax free p.a. like PPF. Continuing for 25 years in same manner, his total outgo was Rs 18,500 p.a. (term plus investment) and inflow will be about Rs. 11Lac. The overall yield will be around 6.5%. Alternatively a high risk cover investment plan from LIC with insurance cover 12Lacs and premium of 18,500 as per current bonus rates is also yielding Rs.11Lacs. Other beniefits include accident riders, insurance cover increasing every year, disability benefit, loan options etc. Also, remember that PPF rate could drop below 8% as well !