A life cover is a must-have to secure the lives of your loved ones in your absence. But choosing a policy can be confusing thanks to the many types of life insurance out there. Term insurance has gained quite a lot of popularity in recent times. They are affordable and quite easy to purchase. Knowing the meaning of term insurance is important. In simple terms, it ensures that your life is secured for a fixed period. With it, you can get a life cover of a hefty sum for a low premium. Buying term insurance ensures that your family will be financially secure in your absence as well.
How do you buy term insurance?
You can buy term insurance online or offline. You can directly contact the agent of the insurance company whose insurance you wish to purchase. Or you can directly buy the insurance online from the company’s official website. It is always advisable to choose a term insurance premium that you will pay with ease during the policy tenure. Also, compare the different term plans offered by different companies before choosing the best one for you.
When you choose to buy insurance, you need to fill in some forms and submit some documents. These documents validate your identity, your age, your income, your address, and your health. Without these documents, the company cannot go ahead with your file.
Can you get term insurance without income proof?
When you buy a term policy, you need to submit documents that validate your personal and professional details. If you do not have valid income proof, you are not eligible to buy term insurance. And without having income proof, the insurance company cannot verify your earnings. They cannot decide your term insurance cover and premium without knowing your accurate earnings. Hence, you are not eligible for a term policy without valid income proof.
What documents do insurers require for validating income proof?
When you are submitting documents, there is a set of documents that validates your income. These documents are treated as income proof and are needed to buy a term policy. The underwriting department of an insurance company goes through these documents to check their authenticity. If they find any discrepancies, they might reject your file.
Here is the list of documents needed for income proof –
- The last three months of your salary slips
- An income certificate which is issued by your employer
- Your ITR (Income Tax Returns) file for the last two years
- Bank statements of your recent six months
- Form 16
It is wise to have the documents mentioned above with you as they will help you get the tax benefits of term insurance when you file during the next tax window.
Why is income proof compulsory?
There are several parameters of your term plan that are drafted based on your income. There is a reason the underwriting department of any insurance company examines income proof thoroughly.
Here’s why the lack of an income proof can affect your chances of getting a term plan –
- The proof that you provide reflects how much you earn. Your earnings help in determining the sum assured of your term plan.
- You have to pay term insurance premiums till the end of your policy’s tenure. Your income helps the company determine your ability to pay premiums.
- Without income proof, there is a risk of over-insurance. Over-insurance is a situation where the coverage bought is more than the actual cash value. Such situations usually lead to the denial of an insurance claim.
If there are discrepancies involved in the income proof submitted, your term policy may lapse. The insurance company may also deny any claims you or your nominee makes.
How can you save on my income tax?
There are several tax benefits of term insurance. You can claim the premium you pay on your term policy under section 80C of the Income Tax Act. Also, if you avail for critical illness riders, you can also claim the add-on premium under section 80D of the Income Tax Act.
Without having income proof, you cannot buy term insurance. Before you plan to get a term plan, collect the documents mentioned above that are needed as income proof. Once you have your income proof along with other documents, the rest of the process should be a breeze.