Can I Purchase Term Insurance Without Income Proof?

As an individual’s family grows, so does their need to provide financial support for each family member in case of an unforeseen eventuality. Term insurance plans are one of the top ways of achieving this. When applying for a term insurance policy, one of the many questions often asked is, “Can I apply for term insurance without income proof?” Keep reading to find out.

Overview of Term Insurance

It’s important to emphasize the following—Term insurance plans without income proof are not possible in India. Essentially there are two main reasons for requiring proof of income documents.

They are:

1. It enables the insurer to determine the type of policy the potential insured qualifies for 
2. Income proof also proves that the intended policyholder will be able to afford the monthly premiums

With that said, let’s review the eligibility criteria for term insurance.

What is Income Proof

What is income proof? Essentially, income proof refers to the documents used as proof that an individual is working and earning a full-time salary. Fortunately, several different types of documents can serve as income proof—keep reading for a list of these.

Can I Purchase a Term Insurance Plan Without Income Proof?

Income Proof is Mandatory for Financial Underwriting

Whether you’re opting to use an insurance broker or buy term insurance online, no policy can be sold without proof of income. The purpose here is to ensure that the intended policyholder earns the minimum income for term insurance.

Comply With Required Documentation to Avoid Complications

Additionally, having salary insurance verified eliminates any complications during the payment of the policy. It also minimizes the chances of having your insurance claim rejected. The last thing you want for your family is to have to deal with a denied claim during a difficult time.

Types of Documents Accepted

As part of the term insurance terms and conditions, the following documents are accepted to confirm income proof.

1. Salary Slips From the Past Three Months
2. Income Tax Returns From the Past Two Years
3. Bank Statement From the Past Six Months
4. Employer’s Income Certificate
5. Form 16

Why is Income Proof Necessary for Term Insurance Purchases?

1. To Decide the Sum Assured/Life Coverage

Having an accurate analysis of the policyholder’s income proof enables the insurer to determine the right sum assured and type of life coverage best suited to your family and budget.

2. For Insurer to Decide Your Ability to Pay the Premiums on Time

For a family to enjoy the benefits of term insurance in your absence, it’s important to have premiums you can afford.

3. To Avoid Over-Insuring and Insurance Claim Denials

Having access to an insured’s income proof avoids being inadvertently over-insured. This will avoid any denied claim issues further down the line.

4. To Avoid Claim Rejections Due to Discrepancies

Discrepancies during the claim process will contravene the term insurance terms and conditions. This will make the claim process difficult and stressful.

What Documents do I Need When Buying a Term Insurance Plan?

Your unique situation might require additional documents to prove certain factors about your policy, income or dependents. If this applies to you, your insurance broker will discuss this with you during your application. The primary documents required are discussed below.

1. Income Proof

A term plan without income proof is essentially not possible. This is because knowing exactly how much a potential policyholder is earning enables the insurance company to decide on the sum assured or coverage they qualify for.

2. Identity and Age Proof

No matter where you’re going to purchase your term insurance from, you will always require documents confirming your identity and age. These documents can come in the form of any of the following documents:

• Aadhaar card
• Passport
• PAN card
• Driving license
• Voter ID card
• Birth certificate
• Marriage certificate

3. Proof of Address

Proof of address also forms part of the documents required for term insurance. “Address proof” as it’s commonly called in India is a document that will serve as official evidence of your permanent address. These types of documents can be any of the following:

• Bank statement
• Ration card
• Electricity bill
• Telephone bill
• PAN card
• Voter ID card

4. Medical Reports

In most instances, the total cost of your term insurance will depend largely on your current health. For this reason, current and previous medical records form part of the required documents that determine term insurance eligibility.

5. Passport-sized Photographs

Part of your identity verification involves providing a few recent passport-size photos. This is to assure that the identification provided does in fact correspond with who the intended policyholder is.

Conclusion

Investing in term insurance without income proof is impossible. Without the necessary income documents, the insurer won’t be able to assess whether the potential policyholder will be able to afford the requested policy. Additionally, the correct income documents will ensure that you invest in the best possible policy for your family’s future.