We live in a world of uncertainties where at any point of time, financial distress can hamper our wellbeing. While we cannot control the uncertainties around the world, we can try to have a protective cover for minimizing its impact. While an emergency fund is enough for you to suffice during tough times, there should be a cover needed for your loved ones, in case they ever lose you, the breadwinner of the family. A loss of the primary source of income will lead to the family facing tough times monetarily. A term insurance plan is the best way to avoid such a scenario.
Term insurance plans are a type of life insurance where you get a life cover for a fixed period. They usually offer a huge sum as cover at low premiums, when compared to other types of life insurances. Being a budget-friendly and convenient life insurance option, when you buy a term plan, in case of your sudden demise within that term, your nominee will get the vast sum assured. However, since it is a type of pure life insurance, there are no maturity benefits that you get after your term plan expires.
Basic eligibility criteria for term insurance
It is important to know and check eligibility criteria for term insurance the before buying one. Here are some basic criteria for being eligible to purchase most insurance plans:
- The policyholder of the term insurance must be an Indian citizen. PIOs and NRIs can also buy term insurance policies in India to secure their lives.
- For most insurance companies, the minimum age for buying a term plan is 18 years. While most companies have the maximum age of buying a term plan as 60 years. The exact eligible age range varies from one insurance company to another.
- Being a policyholder, you are required to submit all the documents needed while applying for a term plan.
- Most insurance companies have made it obligatory for an individual to undergo a health test before buying term insurance. This helps the insurance company know the medical situations and the risk associated with the policy, to calculate an estimated premium.
- The premium of term insurance for smokers is higher than for non-smokers in most cases. This is because of the high risk associated with the health of the individual engaged in smoking.
Individuals eligible for buying term insurance
Term insurance varies depending on different stages of life. As an individual ages, the financial responsibilities develop and the need for coverage also changes accordingly. Here are individuals who should consider purchasing term insurance-
- Young individuals and professionals
Individuals who have worked recently and may not have any liabilities, should have a term plan. At an early age with no liabilities, paying premiums is quite convenient, and it is an early start towards long-term financial planning. Also, the lower your age, the more affordable your premiums will be.
- Newly married individuals
Individual who have recently tied the knot, can avail a term plan as well. Having individual term insurance plans will ensure that they have sufficient financial cover in case of an unfortunate demise of either of the partner. Use a term insurance premium calculator to get an estimate of the premium you will be required to pay for your desired sum assured.
Your parents have secured your life since the day you were born. Now that you are on your own feet, it is time to give back. You can buy a term plan for your parents to secure their lives. Also, if you are planning a family and having kids in the future, it is more vital than ever for you to have term insurance too. Depending upon your stage in life, the coverage of your term plan will vary.
- Senior citizens
Not all people choose to retire or may have the liberty to retire. Many senior citizens in the country still are the breadwinner of their families. Some may have dependents to support or some may work to pay off their debt. In any of the cases, they can secure their lives with a term plan so that, in their absence, their family does not face any financial difficulties. A term insurance premium calculator will give them an estimate of the premiums they need to pay for getting a term plan.
The documentation process of term insurance
When you are buying term insurance, there are certain documents that you need to submit to the insurance company to fulfil the underwriting process. You can easily upload these documents online or courier them directly to the insurance company. Some of the common documents that most insurance companies ask for are:
- Age proof
- Identity card
- Address proof
- Income proof
Once you have submitted the documents and made the required payment, you have secured your and your family’s financial future.