Life insurance plans are an important inclusion in your overall investment portfolio, as they provide financial security to your family in your absence. Term plans are gaining popularity due to their convenience, affordability, and beneficial features.
What are term plans?
Term plans are pure life insurance covers that pay the benefits to your nominees if an unfortunate event occurs during the policy duration. Most term plans do not have any survival or maturity benefits. So, the premium on these policies is lower than traditional life policies.
Additionally, term plans offer multiple tax deductions. As per Section 80C of the Income Tax Act, 1961, an amount of up to INR 1.5 lakh paid as a premium is tax-deductible. Moreover, the policy benefits paid to your nominees are tax-free under Section 10 (10D) of the Act.
Having understood the term insurance plan meaning, here are important documents you will need to submit for buying this policy:
- Identity proof
This is a crucial document required to apply for a term insurance plan. You can provide photo identity proof, such as an Aadhar card, driving license, Permanent Account Number (PAN) card, voter ID, or passport. In some instances, the insurance company may accept an official letter, which is duly attested by a government officer as the identity proof.
- Address proof
You need to submit an address proof when you buy an online term plan. The document should be an official proof providing details of your permanent address. Some of the documents allowed as address proof include ration card, bank statement, passport, and PAN card. Insurers also accept documents like telephone, gas, or electricity bill.
- Income proof
The insurance company requires adequate proof that you can pay the premium on time for continued coverage. You will need to provide income proof, such as income tax returns (ITRs), salary slips, or Form 16. You can use an online calculator to know the approximate premium payable. It helps you to determine how much amount you can afford to pay without facing any financial distress. The premium is eligible for term insurance tax benefits as per the income tax guidelines.
- Age proof
In addition to the above documents, you will have to submit an age proof to ensure you meet the eligibility criteria. Some of the accepted documents include a college or school leaving certificate, marriage certificate, and birth certificate.
- Medical reports
Your health condition is a vital aspect based on which the insurer decides the term insurance premium. Therefore, you need to send your past medical reports to ensure that you do not suffer from any critical ailments. Most insurers do not cover pre-existing conditions for a certain period from the policy start date. Additionally, the insurance company may require you to undergo a complete medical checkup before approving your term insurance application.
Term plans are an affordable and convenient way to procure higher sum assured (SA) for your family’s monetary stability when you are not there to take care of them. Moreover, the term insurance tax benefits reduce your liability. So, you can save a significant amount over the long term.
It is important to submit these documents so that the insurer can check your eligibility and process your application. Make sure that the documents are authentic. If you provide any inaccurate information or withhold any necessary details, it may result in the rejection of any claim that your nominees file in the future.
If you still have not secured your family’s financial future with a term plan, get organized with the required documents, and apply for a policy today.