In India, around 35 crore individuals have life insurance policies according to a survey done by the Insurance Regulatory and Development Authority of India (IRDAI) as of March 2021. This figure indicates that the density of life insurance policies is very low in India. The reason is simple, very few people are aware of the financial benefits of buying term insurance in India.
In this blog, we will understand the eligibility criteria for buying term insurance in India. let’s dive in.
Term Insurance Eligibility Criteria
Term insurance plans in India are ideal for people who want to secure the financial future of their loved ones in case of their unfortunate death. Anyone can buy term insurance in India with a legal age. Let’s understand the eligibility criteria:
Age
A person between 18-65 years of age is eligible to buy term insurance in India. The younger you are, the less premium you have to pay. Hence it is a smart decision to buy a term plan when you are young.
Income
For buying term insurance, there is no specific minimum income, but the insurance company asks for your bank statement or salary slip to find out the best term plan for you and to ensure that you would be able to pay the premiums on time.
Citizenship
You must be an Indian citizen to buy a term insurance plan. But if you wish to go abroad for studies or work, your eligibility remains the same.
Medical tests
For buying term insurance, you must go for medical tests and it is crucial to disclose your medical history and records. This step determines your premium amount. For instance, if you had any surgery in the past, the premium of the term plan would be higher.
Lifestyle Habits
Lifestyle habits such as smoking/drinking or bad sleeping patterns also determine the term insurance premiums. If you smoke or have been a smoker, you must disclose this information while buying the term plan. This is because you have a higher risk of having severe medical conditions in the future.
What are the Documents Required for Term Insurance?
Having the required documents is essential for buying term insurance. Here is the list of documents you need:
Identity Proofs
Photo identity such as passport, voter’s ID card issued by the Election Commission of India, permanent driving licence, or Aadhar card.
Residential Proof
Permanent address proof such as a passport, voter’s ID issued by the Election Commission of India, permanent driving license or Aadhar card is required.
Age Proof
You need to provide age proof because there is a lower and upper age cap in a term insurance plan. Age proof such as birth certificates, marriage certificates and school or college pass certificates are required to submit.
Photographs
You require recent passport-size photographs for the verification.
Who Should Buy a Term Insurance in India?
Anyone can buy term insurance in India because life is full of uncertainties and it is important to plan for uncertain circumstances. The following people can buy term insurance to secure their financial future:
Young Individuals
If you are entering into a new job, or starting a new professional journey, it is the right time to buy a term plan. When you are young, you are healthy and term insurance is more affordable with less premium and higher coverage.
Newly Wedded Couple
If you have recently been wedded, it is the right time to buy term insurance because your financial responsibility increases when you start a new family.
Self Employed
Self-employment is a type of income which has some uncertainty of generating regular income and it is always crucial for them to buy a term plan to protect their family financially if the business faces a downfall.
New Parents
If you have recently become a parent of a newborn child, or planning to have a child soon, it is crucial to financially secure your family. Having a term plan safeguards your child’s future in your absence.
Sole Earner of the Family
If you are the only breadwinner of your family, it can be a daunting task for your family to survive without your existence. But with term insurance, your family will get the death benefit if you are not there.
Helps in Repayment of loan
If you have any loans or mortgages, it can be a financial burden for your family if you are not there. Term insurance can provide financial assistance if you die suddenly.
Those who prefer to stay covered
Term insurance is an affordable protection plan and it is a great investment for people who are looking for a smooth life.
Conclusion
Lastly, a term plan is beneficial for individuals of all age groups. The eligibility criteria we have seen above are crucial to understand before buying a term plan. These eligibility criteria may vary depending on different insurers but keeping all the documents in place allows you to have a smooth insurance buying process. You can also use a term insurance calculator to determine your premium for any particular term plan.
