Documents Required to Buy a Life Insurance Policy

Overview of Life Insurance Policy

 

A life insurance policy is a protection tool which may help you create a financial safety net for your family in your absence. It covers the risk of premature demise and pays a death benefit if the life insured passes away prematurely. Moreover, with the different types of life insurance plans available, you can even save up for the different financial goals that you may have. So, in effect, a life insurance policy may help you take care of your financial goals and offer protection too. You just need to keep your requirements in mind while opting for the same and keep the documents required for a life insurance policy handy for easy processing of the same.

 

Why Buy a Life Insurance Policy?

 

There are various benefits to buying a life insurance policy. Some of the common ones are as follows –

• The policy provides financial assistance in the case of premature demise. This assistance may help the family take care of their financial needs if the breadwinner passes away.
• Savings-oriented life insurance plans can help you create a corpus for your financial goals.
• Different types of life insurance plans are available in the market. You can choose a plan to match your goal. For instance, child plans can help you secure your child’s financial future while retirement plans help in retirement planning.
• There is a tax benefit with life insurance plans too as the premium paid and the benefits received qualify for tax deduction and exemptions subject to specified terms and conditions.

 

Documents Required For Buying Life Insurance Policy

 

When buying a life insurance policy, a few documents are required so that the insurance company can underwrite the policy. Some of the common documents required for a life insurance policy are as follows^{1 and 2} –

1. Proposal form

The proposal form is the basis of the insurance contract. It contains various details which you need to provide. The filled-up proposal form depicts all the important information about you that the insurance company needs like your personal details, financial details, medical details, etc. So, you have to fill out the proposal form, sign it and submit it to the insurance company when seeking to buy a life insurance policy.

2. Identity proof

A valid identity proof includes a list of documents which are accepted by the insurance company. Some of these include the following –

• Aadhaar Card
• Passport
• Voter’s ID Card
• Driving License, etc.

3. Age proof

When it comes to age proof, there are various documents that you can choose to submit. Some are called standard age proofs while others are considered to be non-standard age proofs, which are less reliable. Some common examples of each of these age proofs are as follows –

Standard age proof³

• Birth certificate issued by municipal authorities
• Baptism certificate available from the Family Bible
• School or college records
• If you are employed, records from the employment register of your employer
• Any identity card issued by the Defense department
• Marriage certificate issued by the Roman Catholic Church
• Passport
• Domicile certificate

Non-standard age proof

• Employers’ service records
• Self-declaration
• Declaration by elders
• Driving license
• Ration card
• Electoral roll
• Certificates issued by Village Panchayats, etc.

4. Address proof

Some of the commonly accepted address proofs include the following –

• Driving License
• Job card issued by NREGA duly signed by an officer of the State Government,
• The letter issued by the National Population Register containing details of name, address
• Aadhaar Card
• Passport
• Voter’s ID Card, etc.

5. Income proof

In the case of high-value life insurance plans, income proof might be needed. Some commonly accepted income proofs include the following –

Standard Income Proof: (Any one of the following is acceptable)

• Income Tax Returns (ITRs) with Computation of income of past 3 years.
• Evidence of Salary earned:
• Salary slips of past 3 months certified by the employer with company seal with mandatory requirements like Employee no., PF No., Bank Account number, month etc.
• Latest Employment Contract Letter on company letter head (not more than 3 months old).
• Latest Form 16.
• Bank Statements of the past 6 months showing salary credit in case of salaried individuals only.
• Profit & Loss Accounts and Balance Sheets duly audited by a Chartered Accountant (giving membership number) of past 3 years.
• Form 16A in combination with ITR s/ PNL accounts and Balance sheets of the insured.
• Form 26 AS

Non Standard Income proof:

• Fixed Deposits/MF/Portfolio statements/Monthly SIP
• Car Ownership documents
• Home or Property Loan
• Bank Statement of saving account
• Credit Card limits

6. Medical reports or questionnaires

Medical reports are not mandatory in all policies. Usually, if you are beyond a specified age, have opted for a high sum assured and/or have an adverse medical history, the insurance company might require you to undergo specified medical tests. Based on your existing health conditions, like diabetes, hypertension, asthma, etc., you might also have to fill out and submit relevant health questionnaires detailing the condition and the treatment that you are taking for the same.

 

Importance of Documents Required for Buying Life Insurance Policy

 

The insurance policy is issued after underwriting wherein the insurance company assesses the risk that you pose. This assessment requires proper information from your end which is why the proposal form is important. After that, the insurance company verifies the information through the documents that you submit when buying the policy.

As such, the documents required for life insurance policies are meant for verification and authentication purposes. The documents submitted help the insurance company do both financial and medical underwriting. Financial underwriting assesses your capacity to pay the premium and afford the sum assured that you have chosen. Medical underwriting assesses your health to determine your mortality risk.

This is why life insurance plans require a set of documents to underwrite and issue the policy.

 

Process to Buy a Suitable Life Insurance Policy for You

 

You can buy a life insurance policy online or offline. However, when buying the policy, it is important that you choose the right plan. Here are some tips on how you can do that –

• Choose a plan that matches your financial goals. For instance, if you are looking for protection against premature demise, a term insurance plan might be suitable. On the other hand, if you plan to accumulate a retirement corpus, a deferred annuity plan might be better.
• Choose a tenure that aligns with your financial goals and gives you the funds when you need them.
• An optimal sum assured is important so that the plan benefits are sufficient to meet your goals and needs.
• The premium paying term and frequency should also be such that the premiums are affordable.
• You may enhance the coverage with a choice of riders available with life insurance plans. Choose suitable riders for all-around protection.

 

Conclusion

 

Buying a life insurance policy has become easy with the online mode. Many plans are available online which you can buy in a few clicks. However, you will have to submit a set of specified documents whenever you buy any life insurance policy. These documents establish and verify your identity and also help the insurer underwrite the insurance policy with complete information.

So, check the documents required for a life insurance policy that the insurer wants and keep them handy for quicker issuance of your proposal.

 

FAQs

 

1. Are there any documents required when the life insurance policy reaches maturity?

When the life insurance plan reaches maturity, the insurance company might send a discharge voucher to you before the maturity date. You just have to fill out and submit the discharge voucher so that the maturity benefits are released easily. Other documents required for maturity claim are policy document, identity and address policy, cancelled cheque, age proof, etc. as requested by the insurance company.

2. Do I have to provide medical records or go through a medical exam when applying for life insurance?

Medical reports are not always necessary but in some cases, you might have to provide the reports or undergo a medical exam when applying for life insurance, if required by the insurer. This usually happens when you are beyond a specified age or you choose a high sum assured. Moreover, if you have mentioned an existing or previous medical condition then also medical records or check-ups might be needed.

3. Is there a particular age threshold for submitting documents for life insurance?

Documents required for life insurance are applicable for all ages. Even when you buy the policy young, you will have to submit your basic documents like identity proof, age proof, address proof, etc.

4. What is the ideal processing time for documents and the decision-making process for a life insurance application?

There is no universal time that can be called ideal. Depending on when you submit the documents, the insurance company underwrites the policy at the earliest and tries to issue the coverage. You can check the application processing time with the insurance company when you are applying for coverage.

References

1. https://www.bajajallianzlife.com/life-insurance-guide/term/documents-required-for-term-plan.html

2. https://mintgenie.livemint.com/news/personal-finance/5-types-of-documents-you-require-for-a-term-life-policy-151658895726106

3. https://nios.ac.in/media/documents/VocInsServices/m3-f2.pdf (page 4)

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