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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 Life Insurance

Buying health insurance online is cheaper and more convenient than getting a policy through an agent. Insurance companies work on the premise that people who have access to the internet and are willing to buy policies online are more likely to be better-off and healthy. Moreover, online plans save a lot of money for the companies as the administrative costs such as documentation and office space get eliminated. The insurance companies pass on the savings to the customer and offer lower premiums on online health insurance plans. With online plans, you do not have to visit the bank of the insurer’s branch and can buy the policy sitting in the comfort of your home.

Canara HSBC Oriental Bank of Commerce Life Insurance provides a comprehensive health insurance plan named Health First. It is a fixed benefit plan that provides a lump-sum amount on the occurrence of heart or cancer-related conditions, besides 26 other major critical illnesses. It is a flexible plan that gives you the freedom to choose the cover you need along with various options to customize the plan according to your requirements.

Diseases can strike without any warnings. Having a health plan protects you from unforeseen financial hardships and helps you lead a stress-free life. A health plan also ensures that you receive quality treatment in case you are diagnosed with a serious illness. A health plan creates a buffer around your savings, which remains unscathed even in cases of substantial treatment costs.

There are no uniform rules to select an insurance policy as the needs and medical history of people vary. However, Health First plan from Canara HSBC Oriental Bank of Commerce Life Insurance offers comprehensive coverage, which could be adequate to take care of all your health insurance needs.

The health insurance premium depends on a variety of factors such as age, geographical location, lifestyle habits and occupation. The best way to calculate health insurance premiums is to use a good online premium calculator which is easily available.

With the change in lifestyles, the incidence of diseases has increased drastically. Health insurance is necessary to cover against lifestyle diseases, which are on the rise due to poor nutrition, lack of physical activity and pollution.

A health insurance policy ensures that you and your loved ones do not have to think about the finances while opting for treatment. In the event of hospitalisation, a knowledge of the claim process saves the policyholder from undue hassles. A hospitalisation can generate reams of bills and documents. The claim process of fixed-benefit health insurance is very simple as the payout does not depend on the cost of treatment. In case a critical illness is diagnosed you just have to intimate the insurance company. The insured just has to fill a claims form and attach the doctor’s report on the illness. One doesn’t need detailed bills and prescriptions to claim the sum assured. The entire process is very simple and hassle-free.

Health insurance premiums can help you in reducing tax outgo, as it is eligible for tax deduction under Section 80D of the Indian Income Tax Act, 1961. If you choose a health insurance plan for parents aged 60 years and above, you can claim Rs. 50,000 as a tax deduction. Senior citizens up to 60 years can also claim up to Rs 25,000 as a deduction for the health insurance premiums paid for themselves, or for their spouse or children. This deduction will be available with respect to payments towards annual premium on a health insurance policy, or preventive health check-up of a senior citizen. It is also available for any other medical expenses related to senior citizens. In such a case, if you are paying the health insurance premiums for your senior citizen parents, the total deduction you can avail is Rs. 75,000 per year.

There are no fixed guidelines for choosing adequate health insurance cover, but the cover should depend on factors such as income, family history of diseases and geographical location. Considering the high cost of medical care in metro cities, one should have a minimum cover of Rs 10 lakhs. The cost of hospitalisation and associated costs are higher in large cities. Smaller cities have lower cost of living and a cover of Rs 4-5 lakhs would suffice.

Health insurance plans do not cover all the diseases and certain conditions are excluded from the cover. Some of the common exclusions are:

  • 1.Pre-existing medical conditions
  • 2.Alternative therapies
  • 3.Cosmetic treatments
  • 4.Pregnancy and child birth
  • 5.Diagnostic expenses
  • 6.Dental
  • 7.Injuries caused due to a suicide attempt
  • 8.Waiting period clause
  • 9.Permanent exclusions: Injuries due to war, HIV, intentional injuries, congenital diseases, and others are permanent exclusions

Diseases can strike without any warnings. Having a health plan protects you from unforeseen financial hardships and helps you lead a stress-free life. A health plan also ensures that you receive quality treatment in case you are diagnosed with a serious illness. A health plan creates a buffer around your savings, which remains unscathed even in cases of substantial treatment costs.

Employer waiting period: Waiting period is the length of time that an employer will make a new hire wait before the employee is eligible for coverage access under the company's health

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