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Eligibility Criteria for Buying a Term Life Insurance Policy

dateKnowledge Centre Team dateMay 16, 2023 views122 Views
Eligibility Criteria for a Term Life Insurance

Term life insurance is a policy that provides financial protection to your loved ones. The policy will pay a benefit to the nominees if you pass away during the policy term. You should buy a term plan as early in life as possible, due to low premiums. The more you age, the more you become susceptible to diseases, and it impacts your premium.

To buy a term insurance policy, you must know the eligibility and the documents you will need during the process.

Let us know more about it in detail.

Who is Eligible to Buy a Term Insurance Policy?

Before buying a term insurance policy, you must evaluate your eligibility. Different insurance companies offer different plans, and the eligibility criteria of the plans may also vary.

Listed below are a few general criteria that may be a standard requirement of most of insurance companies:

  1. Age

    For being eligible to buy a term insurance plan, you must be at least 18 years. The maximum age depends on the policy and the life insurance company.

  2. Citizenship

    The person buying a term insurance policy should be a citizen of India. However, PIOs and NRIs can also buy a term plan.

  3. Medical Tests

    It is mandatory to undergo a medical test in most cases while buying term insurance. A medical test helps the insurance company to assess any health risks that may impact the policyholder. It is considered to decide the premium of the plan.

  4. Lifestyle Habits

    The term insurance premium for the person who smokes will always be higher than for non-smokers because they are more prone to significant health perils and hence, require more risk coverage.

Documents Required to Buy a Term Insurance Policy

Submitting necessary documents is an essential part of buying term insurance. Listed below are a standard set of documents that you may be asked for by the insurance company:

Documents Type of Proof
Passport Identity and Address Proof
Voter’s Identity Card Identity and Address Proof
Driving License Identity and Address Proof
Aadhaar Card Identity and Address Proof
Latest Income Tax Returns Financial/Income Proof

The insurance company may need additional documents while processing your term plan application.

Who Should Buy a Term Life Insurance Policy?

  • Young People in the '30s

    Term life insurance policies significantly benefit individuals who have just started working and don't have much financial burden. If you buy a term plan at an early age, you can begin securing your financial future.

  • Newlywed Couples

    Individuals who have recently got married may also buy term life insurance to secure their family. The couples can further opt for a joint life insurance policy to assure that the surviving spouse is secured if any unfortunate mishap happens to one of them.

    Critical Illness Cover
  • Parents

    Individuals who have kids or people who are intending to become parents in the future can also buy a term insurance policy, especially when they are the only breadwinner of the family. This term life insurance plan will assure that, in case of your ill-fated demise, the expenses of your children are fulfilled properly.

  • Senior Citizens

    There is a common myth that taking term life insurance at an old age is not worth it. However, if you want to support your children in fulfilling their dreams after retirement, then you must go for a term life insurance policy. A term life insurance can act as a retirement plan and will always assure that all your needs are met, and the goals of your children are also fulfilled.

Term life insurance policies help you stay secure and ensure the financial security of your loved ones. A person paying the premiums can claim tax deductions of ₹1.5 lakhs under section 80C of the Income Tax Act. Further, if the annual premium is less than 10 percent of the sum assured, the benefit conferred to the nominee will get exempted under Section 10(10D).

Buying a term insurance policy is essential for a financially secured and stress-free life. They are one of the most suitable financial instruments you can opt at any age to protect and safeguard your family.

FAQs Related to Term Insurance Eligibility

A person must be at least 18 years to buy a term insurance policy in India.

Yes. You need to pay the premiums to the insurance company, and the company will provide you coverage in return. So, when you buy a term insurance plan, your income will be assessed to know whether you can pay for the insurance policy.

Read more.

The minimum education qualification required to buy a term life insurance plan is graduation. However, this may vary from insurer to insurer.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised to exercise their caution and not to rely on the contents of the article as conclusive in nature. Readers should research further or consult an expert in this regard.

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