Term insurance offers assured financial protection to your dependents in your absence during the policy term. This makes it one of the most essential financial products in financial planning along with the other benefits. It is an affordable option to get high insurance coverage` for your family members. Term plans can also be customised to meet your needs with various optional riders, premium payment terms and payout methods to choose from.

However, before you purchase a term plan, you must understand the eligibility requirements. Term insurance eligibility refers to the basic criteria you must meet in order to buy the plan. Understanding the factors that affect term insurance eligibility in India can help you make an informed choice.

What are the Factors that affect Eligibility Criteria for Buying a Term Insurance Plan in India?

Below are some factors that affect the term insurance eligibility:

Age of the policyholder

Your age should be within the age bracket specified by the insurer for term insurance eligibility.

Citizenship/Residency

Term insurance does not have any strict guidelines on citizenship. The plan can be purchased by all types of individuals, such as Indian citizens or Non-Resident Indians (NRIs).

Health status

The policyholder’s health is another critical aspect that insurance companies evaluate before selling a term insurance plan. Your health directly impacts the premium for your plan. If you are healthy, you can get a term plan with a low premium. However, if you suffer from poor health conditions like diabetes, hypertension or others, the insurance company can determine a higher premium or even deny your application.

Financial status

Your financial status is evaluated when determining your eligibility for term insurance. The annual income of the policyholder should be higher than the minimum annual income set by the insurer. Additionally, the Insurers may require proof of income to ensure that you can afford to pay the premiums regularly.

Address of the policyholder

Insurers don’t sell policies in few localities. So, your locality will also play a role in determining their eligibility for term insurance.

Eligibility Criteria for Buying a Term Insurance Plan in India

Age of the policyholder

The exact age limit depends on the insurer but typically the minimum age to buy term insurance is 18, and the maximum is 65 years. To be eligible, you need to fall within this age range.

Occupation

Your employment status affects your ability to pay premiums. This is why insurance companies check whether you are self-employed, salaried or working part-time. The minimum annual income requirement also varies with your occupation (Salaried/Non-salaried). Insurance companies may also require proof of income to determine the amount of coverage you are eligible for.

Debts & Liabilities

Having significant debts or liabilities can affect your eligibility. If you are carrying a large amount of debt, you may struggle to keep up with premiums. Additionally, you may need a higher sum assured to cover your liabilities.

Who Should Buy a Term Insurance Plan?

Parents

Parents should consider buying term insurance to secure the future of their children in case of an unfortunate event. It ensures a financial legacy that can support their children’s education and other future needs.

Newly Married Couple

A newly married couple can purchase a term insurance plan to ensure financial security for each other in case something happens to one partner. It also helps them prepare for future milestones, such as starting a family.

Working Women

Working women can benefit from a term insurance plan to protect their loved ones and leave behind a financial legacy. It provides security to their family members in case of any unforeseen event.

Young Professionals

Young professionals with financial dependents should consider a term insurance plan. It provides them with financial security and ensures that their loved ones are taken care of if something were to happen.

Self Employed

Self-employed individuals who do not have workplace insurance or other financial products for security can rely on term insurance. It offers a safety net for their family and ensures peace of mind.

SIP Investors

SIP investors can invest in term insurance to offer a guaranteed financial benefit to their loved ones. While SIP investments are subject to market fluctuations, term insurance provides a guaranteed payout, ensuring financial security for the family.

What are the Benefits of Buying a Term Insurance Plan?

Below are some benefits of buying a term insurance plan:

Financial Protection

A term insurance plan offers financial protection for your loved ones, ensuring they are financially secure in your absence.

Affordable Premiums

Term insurance plans are available at affordable rates. You can buy a high sum assured at lower premiums, making them a cost-effective financial tool.

Life Insurance Coverage

Term insurance offers long-term coverage, ensuring your family is protected for an extended period.

Payout of Sum Insured

The sum insured from a term insurance plan can be paid out in different ways, depending on your family’s needs. You can choose from options, such as a lump sum, regular income or increasing income.

Tax Benefits

You can claim tax deductions of up to ₹1.5 lakh on term insurance premiums under Section 80C^* of The Income Tax Act, 1961. Additionally, the maturity benefits of the policy are tax-exempt under Section 10(10D)^*.

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Documents Required for Buying Term Insurance Plans

Below is a list of the documents you can submit as identity and residence proof. You can submit any two documents from the list:

• Passport
• Voter ID
• Driver’s license
• Masked Aadhaar Card
• Passport size photo
• Medical reports