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Term Insurance Eligibility Criteria - Explained

Term insurance eligibility criteria

Term Insurance Eligibility Criteria - Explained


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November 03, 2020

By : Bajaj Allianz Life

At times of financial distress and uncertainty, it is great relief to have a safety net to help you cover for unexpected expenses. One of the most useful investments you can make to fulfil this purpose is that of a term insurance plan. There are a number of term policies that you can avail to meet your requirements as well as make the most of the many additional benefits they offer.

However, like all prudent investments, it is recommended to familiarize yourself with what is term insurance as well as how it works. Moreover, it is also advisable to stay apprised of the criteria for term insurance eligibility since this makes the process of availing the term policy of your choice easier and more convenient.

 

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.

 

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:

• 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.

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The above information is for general understanding and is meant to educate the general public at large. The reader will have to verify the facts, law and content with the prevailing tax statutes and seek appropriate professional advice before acting on the basis of the above information.