Term insurance is one of the most effective tools for securing your family's future in the event of your untimely death. While purchasing a policy may seem straightforward, you need to understand the term insurance eligibility criteria to ensure that the insurer will actually issue the plan. This is important to understand beforehand because these factors not only determine whether you qualify for the plan but also influence your premium amount.
So, if you're planning to buy term insurance in 2025, it's important to understand the eligibility factors insurers consider — from age limits and income assessments to lifestyle choices and medical history. And this is exactly what I will explain in this article.
The “best” plan can vary based on your individual needs, so it’s critical to do personal research or, better yet, speak to one of Ditto’s IRDAI-certified experts and get solid insurance advice. Book a call today to enjoy the ultimate policy buying experience.
Term Insurance Eligibility Criteria in 2025
When purchasing a term insurance policy, you must meet specific eligibility criteria set by the insurers. These requirements ensure that the insurer can adequately assess your risk profile before issuing the policy. This includes factors like age, income, occupation, and medical history. Failing to meet this or providing incomplete information can result in policy rejection or claim disputes down the line. So, let’s take an in-depth look at the most common factors that affect your term insurance eligibility:
Minimum and Maximum Age for Term Insurance
Age is one of the most fundamental eligibility criteria for term insurance. Insurers require you to be at least 18 years old to purchase a term insurance plan because that’s the legal age of adulthood in India. This is because term insurance is designed to replace your income, and in most circumstances, children below the age of 18 will not work. Purchasing it once you begin earning ensures financial protection for your dependents.
The maximum entry age for most term insurance plans ranges from 60 to 65 years. While some insurers, like HDFC Life, allow entry until 65 years, delaying your purchase can significantly increase your premiums. The earlier you buy term insurance, the lower your premiums will be since you're perceived as healthier and less prone to life-threatening risks.
Buying term insurance early also maximizes the benefits. For example, critical illness riders are often unavailable or even quite expensive if you’re above a certain age, making it essential to lock in comprehensive coverage while you're younger and healthier.
Maturity Age for Term Insurance
While some policies, such as whole life insurance, provide coverage for your entire lifetime, most term insurance plans have a maturity age limit of around 85 years.
However, most people do not need coverage till they’re 85 years old, or even 75, for that matter. Selecting the appropriate policy tenure depends on your life stage and financial responsibilities. While insurers may allow you to extend your coverage until you turn 75 or 80, opting for an extended policy may not always be necessary. Let me explain.
In most cases, a term insurance plan that provides coverage until 60-70 years is sufficient. This is because your primary financial obligations — like your children's education, loan payments, or other major expenses — are likely to be fulfilled by this point. Apart from this, people over this age usually rely less on active income, such as a salary. This further reduces the need for income replacement through term insurance. So, choosing an unnecessarily long tenure may not only inflate your premiums without adding significant value, but the value of the cover amount would also be significantly lower should you file for a claim due to inflation.
Income Criteria and Financial Assessment
Your annual income plays the most significant role in determining your eligibility and the maximum coverage amount you can avail yourself of. Insurers evaluate your income to ensure that the coverage amount aligns with your financial profile and meets your family's potential needs in your absence.
Generally, insurers offer coverage equivalent to 20-25 times your annual income. For instance, if you’re 25 years old and your annual salary is ₹10 lakh, your eligible cover amount could be up to ₹2.5 crore. You can use this term insurance calculator to find your ideal coverage amount. Insurers may require additional documentation or stricter underwriting for higher coverage, particularly if your income does not justify the requested coverage. Income proof includes payslips, bank statements, and ITRs.
Previous Life Insurance Policies and Previous Application History
Insurers not only assess your financial and medical profile but also consider any previous life insurance policies you have and your application history. If you already have another life insurance policy, your current application will be reviewed after considering the policy you purchased earlier. Insurers do this to ensure your total sum assured limit does not exceed the permissible limit based on your income bracket.
Insurers also check if you have any rejections in the past. If you’ve been declined a life insurance policy, you should disclose this during the application process for the new policy. Not doing this could lead to rejection later on, regardless of how minute this detail may seem.
Occupation and Employment Criteria
Your occupation is another important factor that insurers assess when determining eligibility and premium rates. Certain high-risk professions may result in higher premiums or even limited coverage options.
Jobs that expose people to hazardous environments — such as construction work, merchant navy, or aviation — carry greater risks, which insurers factor into the pricing structure. Insurers may require additional documentation if your job carries inherent risks, and your premiums may increase owing to those potential dangers.
Education
Insurers also set educational qualifications as a baseline for eligibility. For instance, certain insurers restrict access to their plans for people whose highest qualification is a 10th pass or lower. Most insurers have this criterion in place, but some do not. So, checking your insurer’s criteria before making the purchase is essential.
Medical History and Health Conditions
Medical history is another significant factor that determines your eligibility and premium rates. Insurers often require you to undergo a medical examination to assess existing conditions, lifestyle habits, and overall health risks.
Conditions such as diabetes, hypertension, or heart issues may influence your premiums. Some insurers outright reject issuing the policy if you have any pre-existing diseases. If you have any complex medical history, you should always disclose the details accurately to avoid any claim rejections in the future. Some insurers mandate a medical test before issuing the policy. If this is the case, they cover the cost of medical tests or reimburse you for the expense.
Lifestyle and Personal Habits – Smoking, Drinking, and Extreme Sports
Lifestyle choices — such as smoking, alcohol consumption, or participation in extreme sports — can influence your term insurance premiums. Insurers often classify smokers as high-risk applicants, resulting in significantly higher premiums. Insurers usually have a 50-70% loading charge for smokers, but this can also go up to 100%. This means you will pay 2 times the premium of a non-smoker with the same profile.
When it comes to hobbies, insurers may exclude deaths resulting from risky activities like skydiving, bungee jumping, or scuba diving if you do these on a regular basis. However, your insurer will cover them if they occur as one-off experiences rather than regular hobbies. For example, if you've engaged in adventure sports during a vacation and unfortunately passed away, your insurer is unlikely to deny the claim.
Nationality and Residency Status
Most term insurance policies are available to Indian citizens, NRIs (Non-Resident Indians), and OCIs (Overseas Citizens of India). However, NRIs may face stricter documentation requirements or adjusted premium rates depending on their country of residence. NRIs usually do not need to pay GST on the insurance premium. This will bring down the amount they need to pay by about 18%. However, some insurers impose a loading charge for NRIs, depending on the country.
Apart from this, you may encounter challenges when applying for a policy if you’re residing in conflict zones or politically unstable regions. Certain insurers may also impose additional conditions for people living in countries with higher mortality risks. This could be countries such as Ukraine, Russia, Israel, Syria, Yemen, Sudan, the Central African Republic, the Democratic Republic of Congo, etc. However, do note that this list differs from insurer to insurer.
Document Requirements for Term Insurance Application
To ensure smooth approval, you must provide the following documents:
- Proof of Identity: Aadhaar, PAN card, or Passport
- Proof of Income: Salary slips, bank statements, or Income Tax Returns (ITR) for non-salaried individuals
- Medical Reports: A medical examination may be necessary, depending on the insurer's requirements. Insurers may either cover this cost directly or offer reimbursement.
- Nominee Details: For designating your beneficiary to receive the payout
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Conclusion
A term insurance policy is a necessity, especially if you have dependents such as parents or children. By purchasing your policy when you’re young and maintaining a healthy lifestyle, you can improve your chances of approval and secure lower premium rates. And if you need help choosing the right term insurance plan in 2025, you can always book a call with Ditto Insurance.
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