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Eligibility Criteria for Buying Term Insurance in India

Term insurance is a popular type of life insurance policy that provides financial protection to the policyholder's family in case of their unexpected demise. Read ahead to know more.

  • 21,868 Views | Updated on: Dec 31, 2023

Term life insurance offers a post-life insurance payout to the beneficiary of the policy when the policyholder passes away during the policy tenure. It is a reasonable, uncomplicated, and useful kind of life insurance. This type of excellent life insurance coverage is offered by a cost-effective term plan.

However, you must remember that there are no maturity benefits provided by a term insurance plan. This is the key justification for its low premiums. Like any other insurance policy, there is a term insurance eligibility. Before buying the approach, you must be informed of a number of conditions and limitations. Let’s examine these requirements in further detail so that you can understand them better and make wise financial decisions.

What is a Term Insurance?

A term cover is a pure protection policy that gives your loved ones a pre-decided sum assured in case of an untoward situation. To avail yourself of the lump sum payout, you must make regular premium payments. Security, safety, and protection are some of the initial thoughts you have when you decide to buy term insurance.

Read in Detail: What is Term Insurance?

Term Insurance Eligibility Criteria

This type of insurance policy is ideal for individuals who want to secure the financial future of their loved ones in case of any unforeseen events. However, before purchasing a term insurance policy, it is important to understand the eligibility criteria that you need to meet to avail yourself of the benefits of the policy.

Age

The lower limit is 18 years, and the maximum age for buying term insurance is 65 years. The age at which you apply for the term insurance will determine the premium you are to pay for it.

Citizenship

Anyone applying for term insurance must be an Indian citizen residing in India at the time of purchase. However, term insurance eligibility will remain the same if you leave India for education or work after purchasing.

Medical Tests

Insurers would typically demand underwriting to get a medical test to understand your health. You must be completely honest with them about your medical history. This aspect also plays a significant role in deciding your premium.

Income

There is no specific bracket or limit for income eligibility for term insurance. However, you are asked for your income slips or bank account details to decide the term cover. And also determine whether you have a minimum income for term insurance to ensure that you can pay the premiums regularly and on time.

Job profile

Along with income, your job profile is considered too. You will be charged a premium for your pure-term insurance plan if you work in high-risk environments.

Smoking habits

Whether you are a smoker or non-smoker plays a role in deciding your premium. The premiums are considerably higher for smokers.

Documents Required to Buy Term Insurance

If you are considering purchasing term insurance, there are several documents that you will need to provide to the insurer. These documents serve as proof of your identity, age, and health status and are used by the insurer to assess the risk associated with insuring you. Some of the important documents are as follows:

Identity Proof

An official photo ID would be required to purchase an insurance policy to safeguard against fraud and widespread identity theft. The following list of documents can be used as identity proof

  • Voter ID card
  • PAN card
  • Passport
  • Aadhaar card
  • Address proof

Official proof of a permanent address is essential for buying documents required to claim a term insurance policy as it prevents insurance fraud. Documents that can be used are:

  • Aadhar Card
  • Passport
  • Electricity bill
  • Telephone/Mobile bill
  • Ration card
  • Age proof

A term insurance plan requires proof of age because your age affects your premium. The insurance documents that might serve as age verification are:

  • Birth certificate
  • School/college leaving certificate
  • Marriage certificate
  • Medical reports

Your medical health has a significant impact on both the assured amount and your insurance price. Your medical records are a crucial component of your paperwork because of this.

Photographs

A predetermined quantity of passport-size photos must be submitted for verification.

Another concern policy buyers frequently have is about the minimum educational qualification for term insurance. Usually, insurance companies do not require your educational background. However, those qualifying for a more significant coverage amount are better educated, making it one of those questions that your agent might ask. But remember, it might or might not have to do anything with the application.

Who Can Buy Term Life Insurance Plans?

Term life insurance is intended to give your loved ones financial security in the event of your untimely passing. Unlike other types of life insurance policies, term life insurance does not accumulate any cash value over time, making it an affordable option for many people. But who exactly can buy term life insurance plans? Let’s find out.

Anyone who is of legal age and has dependents can buy term life insurance. Dependents can be children, a spouse, elderly parents, or any other person who relies on you financially. Term life insurance provides a lump-sum payout to your beneficiaries if you pass away within the term of the policy. This payout can be used to pay for expenses such as mortgages, education costs, funeral expenses, and other financial obligations.

Individuals who have a mortgage, personal loan, or other debts can benefit from term life insurance. In the event of the policyholder’s death, the payout from the insurance policy can be used to pay off any outstanding debts. This can provide peace of mind to the policyholder, knowing that their loved ones will not be burdened with debt after their passing.

Young adults who have just started their careers can also buy term life insurance. While many people in this age group may not have dependents, buying a term life insurance policy can be a smart investment for their future. Term life insurance premiums are typically lower for younger people because they are considered to be a lower risk. By buying a policy early on in life, the policyholder can lock in a low premium rate for the duration of the policy term.

Individuals who are self-employed or small business owners can also benefit from term life insurance. These individuals may not have access to employer-sponsored life insurance policies, making term life insurance an important consideration. A term life insurance policy can help protect the business and ensure that it continues to operate in the event of the owner’s untimely death.

Individuals who are looking for a simple and affordable life insurance policy can also consider term life insurance. Term life insurance is generally more affordable than other types of life insurance policies, such as whole life insurance. It provides basic protection for your loved ones at a reasonable cost, making it an attractive option for many people.

Why Must You Get a Term Life Insurance Plan?

Life is full of uncertainties, and no one can predict what the future holds. That’s why it’s crucial to plan for the unexpected, and one way to do that is by getting a term life insurance plan. Following are the reasons why you must get a term life insurance plan:

Financial Protection for Your Loved Ones

The primary reason for getting a term life insurance plan is to provide financial protection to your loved ones in case of your untimely death. If you are the primary breadwinner in your family, your family may struggle to make ends meet if something were to happen to you. A term life insurance policy can help cover expenses such as mortgage payments, education costs, and daily living expenses, ensuring that your family doesn’t face financial hardship in your absence.

Affordable Coverage

Term life insurance policies are relatively affordable compared to other types of life insurance. The premiums for term life insurance are generally lower because the policy only covers a specific period, and there is no investment component involved. This makes it an attractive option for young families and individuals who may have limited budgets but want to ensure financial security for their loved ones.

Flexibility to Choose Coverage Amount and Duration

Another advantage of term life insurance is that it offers flexibility in choosing the coverage amount and duration. You can choose the amount of coverage you need, depending on your financial obligations and the lifestyle you want to provide for your loved ones. Additionally, you can choose the duration of the policy, depending on how long you want to provide financial security to your family.

Peace of Mind

Having a term life insurance policy gives you peace of mind, knowing that your loved ones will be taken care of if something were to happen to you. This peace of mind can be invaluable, especially if you have dependents who rely on you financially.

Easy to Understand

Term life insurance policies are relatively straightforward, and it’s easy to understand what you’re getting. Unlike other types of life insurance policies, there are no complicated investment components or hidden fees. This makes it easier to shop around for policies and compare them to find the best coverage for your needs.

Conclusion

Eligibility criteria for buying term insurance in India is an important aspect that needs to be considered by anyone who is planning to buy a policy. The criteria may differ from one insurance company to another, but there are some basic requirements that are common across the board, such as the minimum and maximum age limits, minimum and maximum sum assured, and the overall health and medical history of the applicant.

It is important for individuals to carefully evaluate their needs and financial goals before choosing a term insurance policy. They should also compare the policies offered by different insurance companies to find the one that best suits their requirements. By meeting the eligibility criteria and choosing the right policy, individuals can secure their financial future and ensure that their loved ones are taken care of in case of an unfortunate event.

    Key takeaways

  • A term cover is a pure protection policy that gives your loved ones a pre-decided sum assured in case of an untoward situation.
  • The lower limit is 18 years, and the maximum age for buying term insurance is 65 years.
  • Whether you are a smoker or non-smoker plays a role in deciding your premium.
  • Anyone who is of legal age and has dependents can buy term life insurance.

- 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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