Can you buy term insurance for your cook or domestic help? | Mint

I want to buy a term insurance policy for my cook. He is 39 years old with an annual income of ₹2 lakh and has a wife and three children. Are there term plans for low-income groups that an employer like me can buy for them? I am willing to pay the premium or transfer the amount to his account. I don’t want Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) as the cover of ₹2 lakh is too low.

— Name withheld on request

Buying term insurance for domestic help such as a cook is a thoughtful step—especially when the individual has dependents and limited financial resilience. However, it is important to structure this correctly so that the policy is legally sound, easy to manage, and claim-friendly for the family.

In India, term insurance is ideally bought by the life insured themselves, even if someone else supports the premium payment. While an employer–employee relationship may establish insurable interest in limited cases, most retail term insurance plans are designed with the insured person as the proposer and policy owner.

This structure avoids complications related to consent, ownership and claims at a later stage, particularly if the employment relationship changes.

Role of government schemes

For low-income households, government-backed life insurance schemes form an important foundation—even if the sum assured appears modest.

Schemes such as the PMJJBY offer life cover of ₹2 lakh at a very affordable annual premium. While ₹2 lakh may not be sufficient as a standalone protection for a family with multiple dependents, the low cost makes it a crucial baseline cover for families that may otherwise remain completely uninsured.

The right approach is to treat government schemes as the first layer of protection. Enrolment is simple, premiums are low, and renewals are automatic from the bank account. This ensures the family has immediate liquidity in the event of an untimely death.

Additional protection, if required, can then be layered on through a standard term insurance policy.

Cover eligibility

Insurers typically assess the eligible life cover as a multiple of annual income. Depending on age, health and underwriting norms, individuals may be eligible for 10–20 times their annual income.

For someone earning around ₹2 lakh a year, this could translate into a potential life cover of ₹20–40 lakh, subject to insurer approval.

Instead of the employer purchasing the policy in their own name, a cleaner and more transparent approach is:

• The cook buys the policy in his own name
• The spouse (or spouse and children) is nominated as beneficiary
• The employer supports this by transferring the premium amount to the cook’s bank account or ensuring timely payment

This ensures that ownership and benefits remain with the family, reducing the risk of disputes or claim hurdles.

Securing a high sum assured for workers in the unorganised sector can be difficult. Apart from applying online, you may also explore offline applications through an insurance agent, which can sometimes improve underwriting outcomes for low-income applicants.