What is online term insurance? What are the documents required?

Term insurance is an insurance which is for a specific tenure as the name suggests and covers all the benefits of life insurance with financial security and other benefits like tax benefits or maturity benefits. It is a financial security blanket for one’s family and dependants.

What is term plan?

Term plan is an insurance plan for a specific period, after which the investor can get maturity benefits. It provides payouts as per the convenience of the investor such as monthly payout, lump sum payout. The plan is at a fixed premium and fixed rate. Thus, anyone in need to secure their financial future should have a term life insurance which will not only give them, but also give their dependents adequate coverage.

Online term insurance is the insurance policy where one doesn’t need to go to the insurance office or stand in queue to undertake the application process. Instead, applying for a term insurance can be easily done online, within minutes. The documentation can also be undertaken online by uploading soft copies of the required supporting documents. This is time saving and allows individuals to assess various policies before choosing one.

As per the documentation requirements for purchasing an online term insurance plan, or any insurance plan for that matter, typically, KYC (Know your customer) documents are required, such as –

  • Proof of identity –

Proof of identity documents typically include PAN, Aadhaar details, driving license and voter ID. This document is required to officially confirm one’s name, date of birth and age.

  • Proof of address –

Address is an important factor to verify the location at which documents need to be sent to the insured. Documents such as the Aadhaar card, bank statement, electricity bill or any utility bill, which mentions the complete address, are typically requested to confirm the address.

  • Medical documents –

If the insured is already suffering from a pre-existing medical condition, they may need to submit valid medical documents and reports to the insurer, in order for the insurer to undertake a complete risk assessment of the insured’s health and accordingly allocate term insurance benefits.

  • Passport photos –

This is also a requirement along with an official online signature to complete the   documentation process.

  • Proof of income –

Getting insured also requires the insured to have the ability to pay the premium and thus insurance companies often mandate an income proof to ascertain the risk-taking factor of the insured. This document can be a salary slip, or a bank statement where the income gets reflected or financial statements in terms of business person.

Thus, these are the documents required for completing the online term plan process, but what are the benefits of having a term insurance?

Benefits of availing term insurance 

  1. Provides adequate coverage –

Having a good term insurance provides coverage in terms of finance, health and coverage to dependants. It not only covers loans and debts in monetary value but also covers critical illnesses and their expenses regarding treatment and hospitalisation.

  1. Taxation benefits

One of the top benefits of having a term insurance is that it provides exemption in the    income tax statement where the insured can claim benefits on premium up to Rs. 1.5 lakh under section 80C of the Income Tax Act, and subsequently maturity benefits under section 10D of the same.

  1. Premium benefits –

Having a high sum insured at bare minimum premium is the benefit policyholders enjoy where the monthly premium covers the insurance protection of higher amounts.

  1. Add on covers –

Besides having normal benefits of the term insurance, policyholders can also gain add-on covers according to the requirements of the policyholder. These benefits are optional and also chargeable as incurring these benefits increases the premium amount payable by the insured.

With the monthly payout option in a term insurance plan, the insured can enjoy the benefits of monthly incomes after their retirement which not only provides financial security but also independence to live their life on their terms. Having a lump sum payout can also cover liabilities and loans that one has to still settle after retirement.

Thus, it is beneficial to choose a term insurance plan online as one can compare, analyse and choose the best plan possible.