Term Insurance - Understanding Eligibility and other Terms and Conditions
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A term plan is a cost-effective, straightforward, and practical type of life insurance that provides a pre-specified death benefit to the policyholder's nominees or beneficiaries in the event of their passing during the policy's term. A term plan offers substantial life insurance coverage for a relatively low price.
However, this policy does not offer any maturity benefits. This is the chief reason why its premiums are affordable. Term insurance contains eligibility requirements for a minimum and maximum entrance age, just like any other insurance product. Also, there are various terms and conditions that one must be aware of before buying the policy. Let's go through these requirements in depth for your easy comprehension.
Who can get a Term Plan and what purpose would it serve for them?
Because these plans are thought to be easily manageable and satisfy the insurance needs of a large variety of individuals, the eligibility conditions for term insurance are rather extensive. The type of policyholder can be classified depending on their age and life stage they are in, which will give them different goals and needs. The following can purchase and profit from term plans:
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Young Professionals - Term Plans are ideal for those who are entering the workforce and do not have any liabilities. They provide tax benefits under Section 80C (exemptions on premiums paid up to ₹1.5 lacs) and Section 10D (exemptions of the death benefit) of the Income Tax Act of 1961. They can give you a head start in financial planning and protecting your future dependents.
Newlyweds - It is essential for Newlyweds to purchase a term insurance plan. To ensure that their dependent spouse’s future needs are taken care of in the event of their untimely death, they can buy individual or joint term insurance plans.
Parents - People expecting a child or considering starting a family should think about purchasing term insurance, especially if they are the family's primary breadwinners. A term insurance policy will ensure that your child's educational, informal, and other needs are secured and protected in the event of financial distress due to your passing away.
Senior Citizens - The common perception that one does not require a term plan in old age has been disproved by many factors, including career alternatives for post-retirement and rising life expectancy in India. Many people decide to continue working after they retire to support their families. If they happen to meet an unexpected demise, the sum assured from the term insurance plan may be able to replace their income and provide crucial financial support to their family. Some people may have unpaid debts or the desire to assist their kids even after they retire. These policies can also secure their child's life goals and addresses any liabilities they may have.
The Common Eligibility Criteria
It is ideal to confirm that you meet the eligibility requirements for the chosen plan before purchasing the chosen term insurance. They vary a lot between insurers and the various plans they offer. However, several fundamental requirements apply to all policies:
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The term plan's insurance buyer or policyholder must be an Indian national. PIOs and NRIs can profit from the term plans offered by Indian life insurers.
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Most insurance providers need the policyholder to take a health exam before they issue a term insurance policy. This helps the insurance corporation understand the medical conditions and dangers involved and also establishes the likely premium payment amount from the life assured.
Due to the many proven health risks associated with smoking, smokers typically pay greater rates for term insurance plans than non-smokers.
The life assured must always provide the necessary paperwork when filling out a term insurance application.
Usually, from 18 to 65, one can get a term insurance policy. Determining term plans based on various life stages is essential. As people get older, their financial goals change, necessitating changes in their insurance coverage.
Some Common Terms and Conditions
When your beneficiaries file a claim, there are some situations in which things might not operate in a very clear-cut and uncomplicated way, and the insurer might reject your claims. Hence, it is essential that the insured and their nominees fully comprehend the terms and conditions (also known as exclusions) of the term insurance plan as they are outlined in the policy document.
Depending on the life insurance policy and the insurer, the precise list of exclusions may vary. However, most life insurance plans do not typically provide coverage for the following types of deaths:
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Suicidal death within a year of policy purchase
You can learn more about the specific exclusions in your policy brochure or online on the insurance company's website.
What Documents Are Needed While Buying A Term Plan?
Once you know the nuances of your policy, both for purchasing and filing a claim later, you can buy it online or offline. Providing the necessary documentation to satisfy the underwriting requirements is one of the vital elements of buying a term insurance policy. If you are buying insurance, it is simple to upload, email, or courier the documents to the insurer.
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Address Proof (Utility bill, Passport, Aadhaar card, etc.)
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Photographs (Passport size photographs of the applicant)
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Income Proof (Income tax return, employer’s certificate, or Form 16)
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Age Proof ( Driving license, Passport, school/college certificate, etc.)
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Photo Identity Card (PAN card, Aadhaar card, driving license)
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Medical Reports (Medical test reports as required for some policies)
CONCLUSION
Term insurance is universally important for individuals at almost all stages of life and offers a reasonably priced form of protection to all. But failing to read and understand the terms and conditions properly could result in the claim being denied. While reading through each exclusion (or inclusion) line by line can be a little tiresome, the effort put forward in the beginning will benefit your family members when it is time to submit a claim.
Ultimately, the distinct advantages that a term plan provides make it a popular protection choice for people in all stages of life; who are married, young professionals, or senior citizens. You can start by using a term insurance premium calculator to see how much you will be required to pay for your desired plan. These tools are available online for free.
Topics : Term insurance
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First Published: Aug 23 2022 | 11:07 AM IST
