- Date : 26/12/2020
- Read: 4 mins
Insurance Regulatory and Development Authority of India introduces Saral Jeevan Bima, term life insurance policy to be available at all insurance companies with simple features and standard terms and conditions.
The Insurance Regulatory and Development Authority of India (IRDAI) has mandated all insurance companies to offer a standard term insurance policy for individuals. The policy has been named Saral Jeevan Bima, and it is aimed to make insurance coverage available to all sections of the society. It will do so by keeping a reasonably low sum assured and maintaining simplicity and standardisation of features.
The IRDAI noted that in recent years, policy buyers have shown a keenness towards pure term life policies. The insurance companies, on their part, have offered innovative term life products that consisted of various features and riders. However, IRDAI understands that customers may not always be able to find the right choice and the preferred sum assured, among the variety of options available. To address this, IRDAI has introduced a standard product, the Saral Jeevan Bima, with standardised terms and conditions across all insurers. By keeping the features simple, the IRDAI expects easier business between the policyholder and the insurer, with a lesser scope of claim settlement disputes. IRDAI requires insurers to file the product on or before 1 December 2020.
Applicability of Saral Jeevan Bima
To be introduced as Saral Jeevan Bima, preceded by the insurer’s name, it will be a non-linked and non-participating pure risk premium plan. It will make payment of the sum assured to the nominee in the event of the death of the policyholder during the policy tenure. Suicide is the only exclusion in this policy, and insurers cannot add any riders, options, benefits or variants, other than those included by the IRDAI. The policy will be available to individuals irrespective of gender, location, occupation or educational qualifications. Individuals between the age of 18 and 65 years can buy this policy. The policy tenure can be between 5 to 40 years, and the maximum maturity age is capped at 70 years.
Details and features of Saral Jeevan Bima
The selected features and policy details of the Saral Jeevan Bima are:
- The sum assured amount starts from Rs 5 lakhs and above, increasing in multiples of Rs 50,000. The maximum sum assured is Rs 25 lakhs, but it can be increased by the insurer while keeping all other terms and conditions intact.
- The premium can be paid for this policy in the form of regular premium, a limited period premium of 5 and 10 years, or a single premium. Payment can be made in monthly, half-yearly or yearly basis. In case of a single premium, the payment would, of course, be made lump sum.
- There are neither any maturity benefits in this policy, nor is there any surrender value.
- No loan can be availed against this policy.
- The only two riders allowed in this policy are accident benefit and permanent disability benefit.
- The pricing of the policy would be as per the file and use guidelines. Interest for late payment of premium will be charged as per the insurer’s policy for similar policies.
- The waiting period for this policy is 45 days. However, accidental death is covered even during the waiting period. In the case of other deaths during the waiting period, 100% of the premium received excluding taxes is paid.
- No policy cancellation value would be payable in case of regular premium payment. In the case of a single premium, 70% of the single premium paid is paid. It is to be calculated on a pro-rata basis between the unexpired portion of the policy term and the total policy period. Similarly, in case of limited period premium paid, 70% of the total premium is paid on the same pro-rata basis.
- The death benefit for regular and limited premium payment policies will be the highest of;
- 10 times of annualised premium or,
- 105% of all the premiums paid as on the date of death or,
- Absolute amount assured to be paid in case of death.
In the case of single premium policies, the death benefit will be higher of 125% of the single premium or absolute amount payable at the time of death.
Industry experts see the easy availability of the policy as a major positive in ensuring more insurance inclusion. Due to the presence of eligibility criteria, people of the lower-income groups remain ineligible for insurance coverage. With sum assured starting a Rs 5 lakhs and being open for all individuals, Saral Jeevan Bima is expected to boost insurance penetration into the Indian populace. See these easy ways to buy a term life insurance policy.