Eligibility Criteria for Term Insurance Plan

What is term insurance?

Let us start by delving into the question of "what is term insurance". Simply put, 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.

Who is Eligible to Purchase a Term Plan?

A term insurance plan is a life insurance plan that provides death benefit to the nominee if the life assured dies during the policy period. Anyone who wants to protect their family’s financial future can apply for this plan. Whether the person is single, married, working, or running a business, the option to buy term insurance is open to most people.

People with Dependants

Some people have loved ones who depend on their income. These could be parents, spouse, children, or other family members. These individuals are commonly seen as eligible for term insurance.

People Without Dependants

Even if someone doesn’t have dependants right now, they can still be eligible. There is no rule that says only people with family dependants can buy a term plan.

Individuals Who Move Overseas

If you buy a term insurance plan in India and move abroad, the policy can remain active if it complies with the insurer’s rules. Make sure to inform the insurer, continue premium payments, and confirm coverage for your new country.

Non-Resident Indians (NRI)

Non-Resident Indians (NRI) may also apply for term insurance in India. They may need to show documents to confirm their NRI status. Other rules are usually the same as for people living in India.

Medical Checks

Some term plans require a health check, and some don’t. Medical history, test reports, and lifestyle habits may be used to decide the premium and coverage.

Habits and Lifestyle

Things like smoking, drinking, and working in high-risk jobs can affect the plan. These details are often needed when filling out the form. They may also change the cost or options available.

Documents required to purchase term insurance

You need to submit a few documents needed when you purchase a term insurance plan. They give the insurance company the ability to find out the facts and details it needs to offer you appropriate term plan options.

If you are buying the plan online, you can upload the documents on the website. If not, you can email or courier them to the company.

• Here are the main documents usually needed: Recent Photo, Identity and Address ProofYou need to give a recent passport-sized photo, a valid ID (like Aadhaar card, voter ID, or passport), and a document that shows where you live
• You also need to share your income details. This helps the company to assess financial capability.and know how much coverage you can get. You can give your salary slip, bank statement, or income tax return.
• Medical reports might be necessary for underwriting, depending on the insurer’s requirements.

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:

• 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.

  
  

• 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.

  
  

• Parents

  
  

  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.

  
  

• 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 chose 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.

  
  

  Why should you get a term insurance plan?

  
  

  While you might be clear about your eligibility status for term insurance, it might also be worth knowing the many term insurance benefits that these plans provide. Here are a few essential reasons why it is worth availing a term insurance plan:

  
  

• Affordable

  
  

  Given that most term insurance plans do not offer maturity benefits, they come at affordable premiums, making them an economical insurance option for many. You can essentially avail high sum assured at low term insurance premiums and ensure that the financial future of your dependents is protected in your absence.

  
  

• Flexible Payouts

  
  

  Term plans also may offer a degree of flexibility when it comes to paying out the death benefit in the event of your unfortunate demise. Depending up on the plan opted for, as per your wishes, your family can receive this amount either as a lump sum and/or as a monthly income. This way, your family can not only receive a substantial amount to meet their life goals but also receive a regular monthly income in your absence.

  
  

• Enhanced protection

  
  

  Term plans also offer you the option of enhancing your coverage by adding various useful riders to your plan at nominal extra cost. These include accidental death benefit, permanent disability benefit, critical illness cover and waiver of premium benefit rider. Such term riders can ensure that in such unfortunate events, your family can be protected from any financial burden.

  
  

Conclusion

 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 option for people at various life stages, whether they be young professionals, newly married or working parents.

Frequently Asked Questions

When should I buy a term insurance plan?

Ideally, it is best to obtain a term insurance policy while you're young, because the premium for the plan is generally lower at a younger age. As you grow older, the premium will typically be more. Therefore, a lot of people will get a policy early to save money. You could still get it later, but it will likely cost you more. The sooner you obtain the policy, the more likely it is that you will be able to obtain a good policy at a favorable price.

What is the eligibility for term insurance?

Term insurance eligibility may differ from one insurance company to another, but the basic checks are usually the same. To be eligible for term insurance, you typically need to be between 18 and 65 years old, have a stable income, and meet the health and residency requirements set by the insurance company. While a specific minimum salary isn't always required, some insurers may assess your financial situation to ensure the policy is affordable.

What is the minimum income required for term insurance?

There is usually no fixed rule about how much income you must have to buy a term insurance plan. Most insurance companies do not set a minimum income limit. Instead, they look at your yearly income to decide the cover amount. In most cases, the coverage amount is around 10 times your income earned in a year.

Who can not buy term insurance?

Some people may not be able to buy a term insurance plan if they do not meet the insurer’s basic rules. For example, if someone does not have proper ID proof, age proof, or address proof, their request may be rejected. If a person’s age is too low or too high, or if their health check-up does not meet the company’s guidelines, the policy may not be approved by the Insurer. Missing documents or wrong information can also lead to the plan being denied.