Financial stability is a crucial aspect of obtaining life insurance plans like term insurance. Insurers need to ensure that applicants can afford the premiums for the desired coverage. Here are the financial factors to consider when applying for term insurance:
- Income level: A steady source of income is necessary to afford premium payments. Insurers may require income proof to confirm this.
- Debt obligations: Existing loans or financial liabilities may impact your eligibility, as insurers assess your financial obligations to determine if you can manage additional premiums.
- Premium affordability: It is essential to select a policy with a premium that fits your budget, considering your income and expenses.
- Coverage amount: The sum assured should align with your financial responsibilities, ensuring adequate protection for your dependents.
- Policy term: The duration of coverage should also be financially feasible, considering your long-term financial plans.
- Future financial goals: Consider your future financial objectives, as they may influence the amount of coverage you need and your ability to pay premiums consistently.
Acceptable identity and address proofs
When buying a term insurance plan, verifying your identity and address is a must. Most insurers accept these commonly used documents:
- Aadhaar Card – Serves as both ID and address proof
- Passport – Widely accepted for both identity and residence verification
- Voter ID – Valid proof of identity and address
- Driving Licence – Accepted for both purposes in most cases
- PAN Card – Valid only as identity proof, not address
- Utility bills (electricity, water, gas) – Accepted as address proof only
- Bank statement with address – Should be recent and officially stamped
Tip: Make sure the details on your documents match exactly with what you enter in your application form to avoid delays in policy approval.
Who should purchase a term insurance plan?
Thinking term insurance is only for older people or those with health issues? Think again. If you have financial responsibilities or loved ones depending on you, term insurance is a must-have. Here’s who should seriously consider buying one:
- Young professionals starting their career: The earlier you buy, the lower the premiums. It’s a smart move for long-term financial planning.
- Married individuals: A term plan protects your spouse’s future and ensures they’re not left financially vulnerable.
- Parents with dependent children: It helps secure your child’s education and lifestyle even if you’re not around.
- Home loan borrowers: Term insurance can cover outstanding liabilities so your family doesn't inherit your debts.
- Self-employed individuals or business owners: If you don’t have employer-backed life cover, this ensures your family's financial safety.
- Single earners in a household: If your income is the only source of support, term insurance is your financial safety net.
Bottom line: If someone depends on your income, you need term insurance. It's affordable, impactful, and a strong pillar of your financial planning.