The need for traditional income documents, like Income Tax Returns or salary proofs, has been removed. This move has widened the access of specialized term insurance plans, making them more accessible for self-employed individuals.
Self-employed individuals often face challenges when securing a term insurance policy and one of the major reasons for this is related to income verification. Unlike salaried individuals, they lack standardized proof of income such as salary pay slips or Form 16.
Another reason that self-employed individuals undergo is income fluctuations. This might be another factor causing insurers to consider them high-risk applicants, leading to either policy rejection or complicated application process.
Insurers now use different digital metrics to evaluate the financial stability of individuals and business owners when conventional income proofs are not available. This includes their credit or loan repayment history. Additionally, the GST database may be referred to.
In order to overcome the challenges, self-employed individuals need to get a few things right. This includes maintaining clear and organized financial records and filling ITRs constantly.
Self-employed individuals should start by assessing their financial needs, such as income, debts, and future obligations, when buying a term insurance plan.
Compiled by Syed Muskan
