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