Eligibility Requirements To Purchase A Term Insurance Policy
Updated On Oct 04, 2021
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Term insurance is a type of life insurance plan in which the policyholder is provided life cover for a specific duration or number of years. It is a simple and cost-effective form of life insurance that provides a predetermined death benefit to the beneficiaries of the insured in case of his or her death.
For the provision of this term coverage, the policyholder pays premiums to the insurer. In the case of term insurance, the lack of maturity benefits means that the premium payments are low and affordable. This is because term insurance plans are purely protective life covers and in the event that the insured survives the term of the policy, the insurer is not liable to pay any amount to the insured.
General Eligibility Criteria Of A Term Insurance Plan
Before availing a term insurance plan of your choice, it is ideal to confirm if you meet the eligibility criteria laid out for the same. While term insurance eligibility criteria can differ across plans and insurers, there are a few general criteria that are constant across the board:
- The policyholder, or buyer, of the term insurance plan must be an Indian citizen. NRIs & PIOs can also invest in term insurance plans offered by life insurance providers in India.
- For most insurers, it is mandatory that the insured undergoes a medical test for term insurance beforehand. This helps the insurer stay aware of any medical conditions and the risk factor associated and determines the premium amounts the policyholder will be expected to pay.
- In general, the term plan premiums for smokers are higher than for non-smokers. This is because smoking has been proven to pose significant health risks to an individual.
- The policyholder must submit the required documents to complete the application process for term insurance.
Documents Required To Purchase Term Insurance
As mentioned above, an important aspect of buying a term insurance plan is submitting the required documents to satisfy the underwriting guidelines. These documents can be simply uploaded if you are buying an online term plan, or emailed or couriered directly to the insurer.
- Photo, identity & Address Proof
- Age Proof
- Proof of Income
Who Can Purchase Term Insurance Plans?
As you can see above, the eligibility criteria for term insurance plans are quite broad. That is because term plans are designed to be accessible and meet the life insurance needs of a wide variety of individuals and families. Here is a list of who may purchase and benefit from term insurance plans:
1. Young Professionals/ Individuals
Term insurance plans greatly benefit people who are just joining the workforce and may not have many liabilities. They provide tax benefits, and can give an early start to securing and planning for your post-retirement future.
2. Newly Married People
People who have recently tied the knot can also avail term insurance benefits. You can avail individual plans or a joint term plan to ensure that in your unfortunate absence, the future needs of your spouse can be well looked after.
People who either have children or are planning to be parents in the future should certainly consider availing term insurance plans. Particularly, if they are the sole earning members in their family. A term plan will help ensure that in the event of your unfortunate demise, the educational and various other needs of your children will be safeguarded.
4. Old People
There are several factors such as increasing life expectancy and post retirement employment options, which have nullified the common belief that you do not require a term insurance plan when you get old. There are many people who choose to work even after retirement and contribute to the household income. Here a term plan may help you to replace the income in the absence of an earner. Many people might also have to support their children even after they retire or could have some unpaid liabilities. A term insurance plan here could ensure that your children’s Life Goals do not face any issues and your liabilities are taken care of in your absence.
Term insurance plans are easily one of the purest and affordable forms of insurance in the market. The eligibility criteria for term plans are quite simple and can provide an economical form of insurance to a wide variety of individuals. At the end of the day, the many benefits that term plans provide make them one of the preferred protection options for people at various life stages, whether they be young professionals, newly married or working parents.
You may also like to read - How Long Should You Have Your Term Insurance Policy For?
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.