Term Insurance Without Income Proof: Is It Possible in India?

What is a Term Plan?

A term plan is a type of life insurance designed to provide financial protection for a specific period (called a ‘term’). Under this type of life insurance, if an unfortunate event occurs and the insured dies, the insurance company pays a lump-sum death benefit to the nominee. If the insured survives the policy tenure, the term plan simply ends, and the insured is not eligible for any maturity benefits.

If you are looking for a term plan that offers a maturity benefit, you can opt for the TROP option. Available as an optional cover or an in-built feature, a Return of Premium plan offers a maturity benefit in case the insured survives the policy term. At maturity, the premiums paid so far are returned to the insured.

Is Buying a Term Plan Without Income Proof Possible in India?

Buying a term plan in India usually requires you to present an income proof as a mandatory document. However, in recent years, many insurance companies have introduced term policies that can be purchased even without income proof. Such policies have made term plans accessible to individuals who do not fall under the category of a salaried employee or have neatly documented proof of income.

Documents Required to Buy a Term Plan

Documents required to purchase a term plan in India can vary depending on the insurance company. However, to give you an idea, here is a list of documents that are usually required to purchase a term plan:

Identity Proof

Any government-issued proof of identification. This can include Aadhaar cards, PAN cards, driving licenses, passports, etc.

Address Proof

Any document showing a valid address of the applicant. This can include utility bills, electricity bills, Aadhaar card, voter ID, bank statement, etc.

Income Proof

If required, the applicant has to furnish proof of income. This includes the salary slips for the last 3 months, income tax returns for the last 3 years, recent Form 16, bank statements, etc.

Medical Reports

Medical examinations and health check-up reports might also be required by the insurance company.

Why You Should Consider Buying a Term Plan?

A term plan is one of the most sought-after types of life insurance policies in India. From life cover to tax benefits, a term plan offers several advantages. Let’s take a look at some of the reasons why you should consider buying a term plan:

Life Cover with High Sum Assured

A term plan offers a high sum assured, providing complete financial protection to family members in the event of the insured's untimely demise during the policy tenure.

Affordable Premium for Cost-Efficiency

One of the most striking features of a term plan is its affordable premium, even for a high sum assured. Purchasing a term plan does not feel like a financial burden.

Tax Benefits under the Income Tax Act

The Income Tax Act provides tax benefits for buying a term plan. When you purchase a term plan, you are eligible for:

• Tax deductions for premiums paid towards the plan under section 80C of the Act.
• Tax-free withdrawal of death benefits under section 10(10D) of the Act.

Option to Rebalance Cover

A traditional term plan offered life cover that remained unchanged throughout the policy tenure. However, many life insurance companies have now introduced modern term plan variants that allow you to rebalance your cover as your life evolves.

Opting to Get Premium Back

A term plan is typically designed only to offer death benefits to the nominees. However, now you can purchase a policy with a premium back option. Under this, the insured can get a refund on the premiums paid towards the policy if the insured survives the policy tenure. So now a term plan can offer dual benefits: Death benefits and maturity benefits.

Things to Know Before Buying a Term Plan

Before you finalise on a term plan, you must be mindful of a few things, like the sum assured, eligibility, tax benefits, etc. To simplify the purchase, we have a checklist for you to keep in mind:

The Sum Assured Amount

The sole goal of purchasing a term plan is to build adequate coverage for your loved ones. Be mindful of the sum assured amount to ensure that your loved ones can easily manage expenses even when you are not around.

Riders You Can Opt

Term plans now offer efficient riders to enhance coverage. Some common riders include accidental death benefit, critical illness cover, waiver of premium on disability, return of premium, etc. Choose a rider smartly depending on your needs.

The Policy Tenure

Under a term plan, you can choose the policy tenure. Rather than choosing a short policy just to reduce the premium, choose a policy term that covers you substantially.

Explore and Compare Plans

If you have decided to purchase a term plan, make sure to explore and compare plans of different insurance companies. This includes comparing features, premiums, and the claim settlement process. If this sounds a little daunting, you can simply head to Jio Insurance Broking for a quick and easy comparison of term plans of reputed insurance companies.

Final Words

Unlike traditional term plans, modern policies are much more flexible. Whether it is reduced documentation or greater flexibility in customising coverage, modern term plans in India have become more efficient and adequate.

To learn more about term policies and their eligibility, you can trust Jio Insurance Broking.

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