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Eligibility Criteria for a Term Life Insurance

dateKnowledge Centre Team dateFebruary 24, 2021 views122 Views
Eligibility Criteria for a Term Life Insurance

People always desire that their family and loved ones must remain healthy and happy. Most times, people do not correlate happiness with financial security. However, financial stability plays a vital role in the happiness of your family. If you are the sole earning member of your family, it becomes your duty and responsibility to assure the financial security of your family because when a time of financial crisis and ambiguity arises, it is a transcendent relief to hold a monetary pool that can help you meet these unforeseen expenditures.

A term insurance plan is one of the most beneficial investments a person can make to meet all their emergency monetary requirements. There are numerous options of term life insurance policies that you can choose to suffice your obligations along with receiving multiple added advantages. It is always recommended that before choosing any term life insurance, you must carefully read all its details and how it operates. Furthermore, you must also be aware of the term insurance eligibility criteria to make the selection process more convenient and easier.

What is term insurance?

Before investing in a term life insurance, many people would have a question in their mind, "what exactly is a term life insurance. In simpler terms, a term life insurance is a kind of life insurance policy in which the person holding the policy is rendered a life cover for a stipulated period of time. This is an easy and cost-efficient mode of life insurance that presents a decided mortality benefit to the inheritors of the person insured in case of his demise.

The policyholder remits the insurance premium to the insurance company for providing him with the term coverage. If any unexpected misfortune takes place during the tenure of the policy, the insurance company is liable to pay the sum assured to the policyholder's nominees.

Basic criteria for term insurance policies

Before choosing the desired term insurance plan, it is essential to validate that you meet and fulfil all the eligibility criteria that are required to avail the plan. The term insurance eligibility criteria can differ based on the insurance type and the insurance company.

Here are a few standard criteria that remain constant everywhere for getting the best term plan.

  • Citizenship

    The person availing the term insurance policy should be a citizen of India. However, nowadays, PIOs and NRIs can also take a term insurance policy rendered in the country.

  • Medical checkup

    It is compulsory for the person insured to undergo a medical test in most of the cases before taking a life insurance policy. Taking a medical test assists the insurance company to remain informed regarding any medical contingencies and the risk factors. This decides the premium sum the person taking the policy will be asked to pay.

  • Smokers

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

  • Documents

    For completion of the application of term insurance policy, The policyholder must present all the needed documents.

Documents needed to buy term insurance

As stated earlier, submitting necessary documents is an essential aspect of getting term insurance that meets the guidelines of the insurer. You can just upload these documents online if you are purchasing the term plan online or can be couriered or emailed if getting an offline one. The documents required are:

  • Address proof (Aadhar, driver license, etc.)
  • Photo identity card
  • Passport size photos
  • Proof of age (Aadhar, driver license, etc.)
  • Income proof (Bank statements, payslips, etc.)

Who can buy term life insurance plans?

The eligibility standards for term life insurance plans are pretty comprehensive. That is due to the fact that these policies are intended to fulfil the life insurance requirements of several types of individuals and families. Mentioned below is the list of individuals who can buy and enjoy the benefits of the best term plan.

  • Young people at '30s

    Term life insurance policies significantly benefit individuals who have just started working and don't have an extensive financial burden. Taking a term life insurance at an early age renders tax advantages, and you can begin securing and devising for your post-retirement days.

  • Newlywed couples

    Individuals who have recently got married can also take term life insurance to secure the family they are going to start. 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.

  • Parents

    Individuals who have kids or people who are intending to become parents in 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 a 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.

Why must you get a term life insurance plan?

Term life insurance policies help you stay secure and ensure the financial security of your loved ones. With an easy process of application, the plan covers individuals from all backgrounds and with different needs. However, before getting any policy, even the term life insurance, it is necessary to understand the benefits the one accrues from getting it. Aside from helping you secure the financial stability for you and your family, the best term insurance plan offers many other advantages.

Mentioned below are some of the primary reasons why you must avail a term life insurance.

  • Economical

    While many term life insurance policies do not extend maturity bonuses, they hold the most economical and affordable premiums. This is the factor which makes it the most viable option for many individuals.

    People can basically get the huge assured sum and that too at economical premiums. This would assist them in securing their family's future in the best possible way.

  • Flexible returns

    A term life insurance further provides a high level of adaptability when it comes to remitting the mortality benefit to your family in case of your unfortunate death.

    Your family holds the option of either taking the lump sum amount or in the form of monthly insurance depending upon the policy you opted. In this way, your family will remain secured and not face any financial crisis in their life.

  • Enhanced security

    Term plans further offer you the alternative of intensifying your coverage by supplementing numerous beneficial riders to your term plan at a low additional charge. These riders comprise severe disease cover, permanent incapacity advantage, accidental mortality benefit, and renunciation of premium benefit rider. Such riders can assure that in any of these unlucky circumstances, your family will remain secured from any monetary stress.

    Apart from this, a person paying the premium of a term life insurance policy can claim tax deductions of Rs 1.5 lakhs under section 80C of the Income-tax Act, 1961. Furthermore, if the yearly premium is less than 10 percent of the amount secured then the benefit conferred to the nominee via a term life plan will get exempted under Section 10(10D) of the income tax act.

  • Moderate premiums at an early age

    When you buy a term life insurance plan at an early age, you hold the benefit of paying a moderate premium amount every month even if you take a risk cover of Rs 50 lakhs that would cost a higher premium if you avail at the age of 40 or 50.

    The simple reason for this disparity is the risk related to insuring you. It is evident that an individual is more healthy at an early age, and the risk of diseases like cancer, diabetes, stroke etc., is low. Hence, it is advisable to opt for a term life insurance plan at an early age.

    Getting a term insurance policy is essential to living a financially secured and stress-free life. However, it is important to analyse and evaluate the terms and conditions mentioned in the term life insurance policy before purchasing it. The eligibility criteria for availing a term plan is extremely uncomplicated and can render a cost-effective form of insurance to people from all walks of life. Term life insurance policies hold numerous advantages. They are one of the most suitable investment alternatives that you can opt at any age to protect and safeguard your family and loved ones.

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Frequently Asked Questions (FAQs) for Term Insurance Plans

A person can only purchase a term insurance plan till the age of 65 years, and they can choose the risk coverage for up to 99 years of age. One can easily buy the best online term plan between the age of 18 to 65 years.

This being a term insurance plan doesn't offer any payout after maturity or expiration date

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 65 years of age. This is a term plan with return of premium option – that means all the premiums paid throughout the tenure will be paid back to you if you outlive the policy.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly when you buy the best term plan in India.

If your key purpose is to give your Family financial protection, go for the best term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan. iSelect Star is a term plan with return of premium option. All the term insurance premium will be paid back to you, if you outlive the policy term.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, the best term insurance plan pays a part of the sum insured to treat your disease.

Term life insurance plan riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance plan riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term insurance policy remains active until the expiration date.
  • Income Rider: This rider in a term insurance plan ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term insurance plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while Buying the Best Term Insurance Plan?

  1. 1. Are you buying a term plan with return of premium?
  2. 2. Amount of premium you have to pay based on your age, habits, education, and monthly income
  3. 3. The total number of benefits covered in the term insurance plan. Do they include benefits that you care about the most?
  4. 4. How to save money on tax if you pay for the term life insurance plan?
  5. 5. Do they offer regular income options?
  6. 6. Can you change the coverage and premium in the future?
  7. 7. Does the claim consider valid if death occurs outside India?
  8. 8. Which kind of death is not covered by a term insurance plan?
  9. 9. Can NRIs take a term insurance plan? If yes, what are the conditions?
  10. 10. Does the term insurance plan have a cash value if you decide to cancel the term insurance policy?
  11. 11. Under what circumstances can a term insurance plan be cancelled?
  12. 12. Can I pay the premiums online or make electronic payments?
  13. 13. What will happen to the term life insurance plan if the life assured starts smoking after purchasing the policy?
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