I have a 45K salary. Am I eligible for a term insurance plan?

Following the COVID outbreak, people have been increasingly concerned about their lives and what could happen to their families afterwards. This is the primary reason why one saw the spike in health and life insurance policies. Before you purchase the term insurance plans, it is imperative to know the eligibility conditions laid down by the insurance company. Finding out whether one’s employment situation influences their term insurance application is critical, as people nowadays are frequently engaged in full-time freelance activities. 

Why is my current income an important factor in my term insurance application?

Every time you renew a term insurance plans, or even the first time you contact an insurer, the insurance company requests that you submit proper income proof. If you do not want to give this information, the application will not proceed to the next step. Have you ever wondered what makes income proof such a valuable piece of information for an insurer? Well, here are the reasons:

A term insurance plans is designed to replace the insured individual’s income in the event of their death within the policy term. As a result, before accepting the coverage amount you want to be insured at, the insurer must estimate the estimated income that the concerned individual may make per year. 

In order to determine a person’s ability to pay premiums, insurance companies require proof of income. When they are confident in your earnings prospects, they are more likely to accept your term plan application with the higher sum assured. As a policyholder, you can also check whether the monthly outgo is within the budget or not using a term insurance plan calculator. 

Aside from the two reasons listed above, insurance firms want to know about the policyholder’s employment history and assess their future career prospects. This is done to determine whether you fit into the category of high-risk professions or not. Furthermore, the coverage amount you want the sum assured for depends on how stable you were in your previous job and your current job position. Insurance firms also favour salaried individuals over self-employed people since they can provide clear proof of income. 

How should I earn enough to buy term insurance?

In India, there is no minimum income requirement in order to buy the term plan. This is done to make sure everyone has access to insurance. However, if you are a salaried professional, the insurer would undoubtedly request previous salary slips to understand your paying capacity. 

In addition, insurance companies evaluate self-employed individuals’ bank account information and income tax records before determining the term coverage they are eligible for. 

There could be insurance companies that may set a minimum monthly income to ensure that their clients can pay their premiums on time. To know how much premium you need to pay, you can always use the term insurance plan calculator to know the monthly outgo. 

Are there any other eligibility Criteria to know beforehand?

To be eligible for a term insurance plans, you should meet the following requirements:

• You must be at least 18 years of age. Furthermore, many insurance firms have a maximum age of 65 years, although this could vary. The premium you will end up paying will be determined by your age at the time of application. 
• An applicant requesting a new policy must be an Indian or a resident of the nation during the approval process. The agreement remains in effect even if you leave India for employment or studies after acquiring the plan.
• Before applying for a life insurance policy, you must get a full body health checkup. This step cannot be bypassed since the insurer must have your current health state before confirming the sum assured coverage.
• In addition to everything else, your preferred insurer evaluates your job profile. For example, if you work in a profession with a high level of risk, your premiums will be altered accordingly.

What Documents Are Required to Purchase a Term Plan?

To obtain a term insurance plan, you must provide the following documents:

ID proof (Aadhaar card, PAN card, passport, or voter ID card): These details are required for the insurance company to cross-check the information you submitted. In exchange, they offer to financially protect you from fraud and identity theft. 

Permanent Address Proof (electricity bill, ration card, and mobile bill): Similar to ID proof documents, these documents can also protect you against fraud, particularly when submitting a claim.

Income Proof: Financial records from within the last three months are considered as proof of income. It entails income tax returns (ITRs) for the last three years, as well as bank statements from the past six months that show your pay.

Age verification (birth certificate, school/college leaving certificate, and marriage certificate): Insurance companies require this document since premiums are based on your age at the time of application. 

Aside from these documents, you will need to provide the firm with your most recent medical reports and current passport-size photographs in order for the term insurance application to be accepted. 

So, we are saying

Term insurance benefits people of all ages. Before applying for a term insurance plans, you must first determine your eligibility. Although the eligibility criteria differ amongst insurers, the fundamental requirements are similar. Some important term plan qualifying features are the policyholder’s age, medical condition, and income. From the above discussion, you must have gotten to know about minimum income eligibility conditions for term insurance. You only need to meet the aforementioned conditions and provide the required documentation to ensure that your request for the term plan is validated.