What is the Eligibility Criteria for Buying Term Insurance

Buying a term insurance plan is one of the smartest decisions to protect your family’s future. But before you can reap the benefits of this protection, you need to meet the term insurance eligibility criteria. Different life insurance types have different eligibility criteria; understanding them ensures you’re fully prepared and your application process goes smoothly.

Eligibility Criteria for Term Life Insurance

When it comes to securing term life insurance, not everyone qualifies automatically. Insurance companies have set criteria that help them assess whether an individual is eligible for coverage. Let’s break down the key factors that determine your eligibility:

• Age: Age is a fundamental criterion in determining eligibility. Typically, individuals between 18 and 65 can apply for online term insurance. But generally, the younger you are when you apply, the better your chances of approval and the lower your premium.
• Income: Your income level plays a significant role in determining your eligibility and the sum assured. Insurance providers want to ensure that you can afford to pay the premiums, and that the coverage aligns with your financial profile. A steady income increases your chances of securing a policy with a higher sum assured.
• Citizenship: Most insurers in India offer term insurance to resident citizens or NRIs (Non-Resident Indians). Insurance companies require proof of citizenship or residential status to process your application.
• Occupation: Your job can impact your eligibility as well. High-risk professions, such as those involving hazardous activities, might increase premiums or make you ineligible for certain policies. Conversely, individuals in lower-risk jobs typically have an easier time getting approved.
• Smoking Habits: Smoking is a major factor that insurance companies consider. Smokers are considered a higher risk due to the associated health problems, which can lead to higher premiums or even disqualification from certain policies. If you’re a smoker, be prepared for a more stringent evaluation process.
• Job Profile: Your occupation is not the only factor that matters. Your specific job profile or the sector you work in can also influence your risk profile. For example, someone working in an office environment has a lower risk profile than someone working in construction or mining. Your job profile will also influence your eligibility and premium rates.
• Medical History: Your medical history is crucial in determining your eligibility. Insurers will review your past and present health conditions, looking for potential risks. Pre-existing conditions, if not disclosed or managed, could lead to your application being rejected. Full transparency is key to avoiding complications.

Documents Requirements for Term Insurance

Meeting the eligibility criteria is just the first step. You’ll also need to provide certain documents to support your application for buying term insurance online. Here’s what you’ll typically need:

• Identity Proof: Aadhaar card, PAN card, or passport to verify your identity.
• Photographs: Recent passport-sized photos for identification purposes.
• Address Proof: Documents like a utility bill, Aadhaar card, or rental agreement to verify your residence.
• Income Proof: Salary slips, bank statements, or ITRs to assess financial stability and determine the sum assured.
• Medical Reports: Depending on your age and sum assured, medical tests may be required to evaluate health status and risks.

Documentation can be confusing! Here’s a blog that explains the importance of the documents required for an insurance application.  

Who Needs Term Insurance?

Term insurance isn’t just for one type of person; it’s a versatile financial tool that can benefit everyone. Let’s explore who should consider getting term insurance:

• Sole Earner of the Family: Whether you are salaried or self-employed, if you’re the primary breadwinner, your family’s financial security rests on your shoulders. Term insurance ensures that they’re taken care of, covering living expenses and outstanding debts.
• Individuals with Dependents: If you have people depending on you financially and otherwise (e.g., homemakers)—whether they’re your children, parents, or others—term insurance is necessary.
• Young Professionals: Starting your career? This is the perfect time to lock in a low premium rate with term insurance. Young professionals often get the best rates and can secure significant coverage that grows with them as their responsibilities increase.
• Newlyweds: Marriage brings financial responsibilities. Term insurance ensures your spouse is protected as you build your life together.
• Parents: Term insurance secures your child’s future, covering education and other expenses even in your absence.
• Retired Citizens: Even in retirement, term insurance protects your loved ones from financial strain. Some policies offer a return of premiums after a certain age, helping you strengthen your retirement corpus.
• Individuals with Outstanding Liabilities: If you have loans, term insurance covers these liabilities, so your family isn’t burdened with repayments.

At Bandhan Life this feature is called the ‘Special Exit Value’ and you can avail it buy buying our bestselling term plan --iTerm Prime.  

Why Must You Get a Term Life Insurance Plan?

Still unsure? Here’s why you should consider buying a term life insurance plan:

• Comprehensive Financial Protection: Offers substantial protection at an affordable cost, ensuring your family are financially secure in case of your untimely death.
• Long-Term Coverage: Covers you for 10 to 40 years, protecting your loved ones as long as they need support.
• Rider Benefits: Customize your policy with additional benefits like critical illness cover, accidental death cover, or waiver of premium.
• Income Tax Benefits: Enjoy tax deductions on premiums under Section 80C, and the death benefit is usually tax-free under Section 10(10D).

Bottom Line

Of all life insurance types, term insurance is a must have. Therefore, understanding term insurance eligibility is crucial for securing the right coverage to protect your family’s future. By meeting the basic criteria, providing necessary documents, and recognizing the importance of term insurance, you can make an informed decision that offers peace of mind. Whether you’re just starting your career, raising a family, or planning for retirement, term insurance is a valuable tool for safeguarding your loved ones.

Frequently Asked Questions

1. Who is eligible to buy term insurance?

Eligibility typically includes being between the ages of 18 and 65, having a stable income, and meeting the health and residency requirements set by the insurer.

2. Why is occupation important in term plan eligibility?

Your occupation affects your risk profile. High-risk jobs may lead to higher premiums or limited coverage options, while low-risk occupations typically have easier eligibility and lower costs.

3. What is the minimum salary required for term insurance?

There isn’t a fixed minimum salary, but your income should be sufficient to cover the premium payments. Insurers assess your financial situation to ensure that the policy is affordable for you.

4. Can an unemployed person take term insurance?

Yes, but it might be more challenging. Insurers typically prefer applicants with a steady income to ensure premium payments are manageable. However, if you have other sources of income or substantial savings, you may still qualify.