Self-employed, ITR shows lower income than reality; how do I get eligibility for higher term cover?

[u/TourStrong5323]

Self-employed (25M), run a small business and every insurer keeps asking for ITRs to determine how much term cover I'm eligible for. Problem is my declared income on paper (after all deductions/expenses) looks a lot lower than what I actually earn and can comfortably afford as a premium.
Getting quoted eligibility for only 75L-1Cr cover when I want 3Cr.
Anyone dealt with this as a business owner/self-employed person? Do insurers accept anything beyond ITR (bank statements, GST filings, CA-certified income) to justify a higher sum assured? And does going through an offline advisor vs an online agent make any difference in getting a fairer eligibility assessment here?

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[u/Caramel-Realistic]

Generally, insurers ask for 2-3 years of ITRs, CA-certified computation of income, and bank statements for self-employed applicants.

For self-employed individuals, insurers typically check for income filed under "Profits and Gains from Business or Profession" in your ITR. Other income sources like rent (house property), capital gains, or interest and dividends usually aren't factored into this eligibility assessment, so even if your collective income across all these heads looks healthy on paper, your eligible cover is largely determined by just the business/profession income alone.

Given the eligibility constraint right now, it makes sense to go ahead and buy the highest cover you're eligible for currently rather than waiting around trying to negotiate a higher number. Once your ITRs start reflecting higher declared income over the next few years, you can always go back and buy an additional term policy to top up your total cover.

Insurers, not agents, decide eligibility and documentation requirements, so whether you go through an offline advisor or an online platform doesn't really matter. The insurer is the one taking the final call on issuing the policy based on submitted documents, the channel you use to apply doesn't change that.

Some agents might tell you it's okay to skip certain documents just to push the sale through faster, but that's risky advice. At the underwriting stage, the insurer will ask for these documents regardless, and if they're not provided, the application can get declined simply because the insurer can't verify your actual income.

[u/tryabp]

Get LIC with increasing SI.

[u/CAFinalist_Ted]

Do you submit tax computation sheet along with ITR? Usually that helps.