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Can You Get Term Insurance Without Income Proof?

Proof of income is one of the most important factors in the sale of the term insurance policy. It not only establishes your eligibility to buy an insurance policy but can also be a deciding factor in premiums.

  • 6,242 Views | Updated on: Dec 29, 2023

To ensure that you have the highest chance of finding a suitable plan that fulfills your requirements and preferences, remember that a term insurance policy without income proof is not an option.

The significance and necessity of investing in term plans have risen to the top of everyone’s list of priorities and financial layouts. A term policy offers many benefits that add to your life’s comfort, financial stability, and security while also providing a sense of confidence and assurance for your family’s long-term well-being.

Can I Purchase a Term Insurance Plan Without Income Proof?

As per IRDAI term insurance guidelines, you cannot purchase a term insurance plan without income proof. Income proof is important for the following reasons:

  • Proof of Income is Essential for Financial Underwriting

Whether you engage an insurance broker or purchase term insurance through online channels, the sale of any policy is contingent upon providing evidence of income. The primary objective is to ascertain that the prospective policyholder meets the minimum income criteria for term insurance.

  • Adherence to the Prescribed Documentation is Essential to Prevent Complications

Verifying salary insurance serves to preempt any issues that may arise during policy payment. It significantly reduces the likelihood of encountering a rejected insurance claim, a situation you undoubtedly want to avoid for your family, especially during challenging times.

The Importance of Income Proof for Buying Term Insurance

Term insurance stands out as a powerful tool in providing financial security to loved ones in case of unforeseen circumstances. However, the purchase of term insurance often comes with the requirement of providing income proof. Let us now understand the importance of income proof for buying term insurance.

  • Submitting your income proof when applying for term insurance is a critical part of the process. It is an essential requirement for the insurance company to determine your eligibility for the policy and the amount of coverage you qualify for.
  • Without income proof, the insurance company cannot calculate how much insurance coverage you need and may be unable to approve your application.
  • When you submit your income proof, the insurance company will assess your income and financial status to determine how much coverage you are eligible for. Your income proof helps the insurer determine your overall financial worth and ability to pay premiums.
  • Based on your income proof, the insurer will determine how much coverage you need, to provide adequate financial support to your beneficiaries during your death.
  • Submitting your income proof will also help you ensure that you are not over-insured or under-insured. Over-insurance means paying for more insurance coverage than you need, which can be a waste of money.
  • On the other hand, under-insurance implies you are not covered enough to meet your beneficiaries’ financial needs during your death. Submitting income proof ensures you receive the right coverage that fits your financial situation and protects your loved ones.
  • In addition to determining your eligibility for term insurance, submitting your income proof can also help you to receive lower premiums. Insurers offer lower premiums to individuals with stable incomes and good financial standing.
  • When you submit your income proof, the insurer can determine your financial status and apply the appropriate premiums. By providing your income proof, you show that you are a responsible and financially stable individual, which can help you get the best rates.

Important Documents Required for Buying Term Policy

One of the crucial steps in acquiring term insurance is submitting the required documents, including income proof. These documents prove your financial status and help the insurance provider determine your premium rates. Listed below are some essential documents required for term insurance.

Identity Proof

To avail term insurance, you must provide valid identity proof, such as an Aadhaar card, PAN card, voter ID card, or passport. These documents confirm your identity and help the insurance provider verify your details.

Address Proof

You must submit a document that confirms your current address, such as a utility bill, bank statement, or rental agreement. The address proof is essential to verify your residence, which helps the insurance provider track your whereabouts.

Age Proof

Your age is a significant factor in determining your term insurance premium. You must provide age-proof documents such as birth certificates, school leaving certificates, or passports to verify your age.

Income Proof

You need to provide income proof to confirm your financial standing. Income proof documents include salary slips, bank statements, Form 16, or Income Tax Returns. These documents help the insurance provider assess your financial capacity to pay the premiums and the sum assured.

Medical Documents

Medical documents such as medical history, reports, and certificates help the insurance provider determine your health status. This information is essential as it allows the insurer to evaluate the risk of insuring you.

Nominee Details

A nominee is a person who will receive the death benefit in case of your demise. You need to provide the nominee details such as name, address, age, and relationship with you.

Benefits of Term Insurance Policy

Term insurance is a straightforward and cost-effective life insurance that provides coverage for a specified term. While the concept may seem simple, the benefits it offers are profound.

Protection from Liabilities and Loans

A term insurance policy offers financial security to the policyholder’s dependents, safeguarding them against liabilities such as home loans and other debts.

Coverage for Critical Illness

In addition to protecting in the event of death, a term plan includes coverage for critical illnesses. By opting for an essential illness add-on to your term insurance, you can receive a lump sum payment upon diagnosis of conditions like cancer, heart attack, or kidney failure. Refer to the policy documents for a detailed list of covered diseases.

Affordable Premiums

One of the key advantages of a term insurance policy is its affordability, with premiums being the lowest among all types of life insurance plans. Moreover, the sum assured in term plans exceeds the premium amount.

Tax Benefits

Purchasing a term plan comes with the added advantage of tax benefits. The premium payments are eligible for tax deductions up to a maximum limit of ₹1.5 lakhs in a financial year under Section 80C of the Indian Income Tax Act. Additionally, in the case of a death claim, the payout received by the family is exempt from tax under Section 10(10D).

Enhanced Protection with Add-Ons

To broaden the coverage of your term plan and receive additional benefits, you can opt for various add-on covers. Popular add-ons include critical illness coverage, accidental death rider, return of premium rider, and waiver of premium.

Final Thoughts

To conclude, the financial element of purchasing term plans must be addressed before proceeding. To guarantee that you have the best opportunity to find a plan that meets your needs and desires, keep in mind that term insurance plans without income proof are out of bounds. As a result, getting a head start on your financial records beforehand is a good idea.

Key takeaways

  • You cannot buy term insurance without income proof.
  • Whether you purchase term insurance through online channels, the sale of any policy is contingent upon providing evidence of income.
  • Submitting your income proof when applying for term insurance is a critical part of the process.
  • In addition to determining your eligibility for term insurance, submitting your income proof can also help you to receive lower premiums.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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