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Term life InsuranceOctober 22, 2020

IRDAI ask life insurance companies to offer ‘Saral Jeevan Bima’ from January 1, 2021

Those who think buying or understanding term life policy is complicated; your problem is sorted now. Insurance Regulatory and Development Authority of India (IRDAI) has mandated and issued guidelines to all life insurance companies to come up with a standard and individual term life policy ‘Saral Jeevan Bima’ from January 1, 2021. In its circular IRDAI stated that “There are many term products in the market with varying terms and conditions.

IRDAI ask life insurance companies to offer 'Saral Jeevan Bima' from January 1, 2021

Customers who cannot devote adequate time and energy to make informed choices find it difficult to select the right product. It is felt necessary to introduce a standard, individual life insurance product with simple features and standard terms and conditions.”

Industry experts hail this move of introducing a pure term life insurance by the apex body as they believe that this will help in increasing people’s inclusion and the penetration of life insurance in the country. A standard term life policy will ease out the decision making and boost the penetration of term plan in the country.

Moreover, the majority population of the country earns less than 3 lakhs, even not even a lakh and the minimum eligibility criteria for having term insurance is between 3 to 5 lakhs. This implies that a significant part of the Indian population is not even eligible for a term life insurance. Hence, if insurance companies start offering term plan with a small sum assured for the lower-income groups, then this will also definitely increase the penetration of term life policy.

As per the circular, IRDAI has asked all the life insurance providers to file the product latest by December 31, 2020. The insurers can file the product early and start offering it on approval even before January 1, 2021.

Here is the guidelines the Saral Jeevan Bima term life policy:

  • The standard individual term life policy shall be known as “Saral Jeevan Bima” prefixed by the insurer’s name.
  • “Saral Jeevan Bima” will be an individual pure risk premium life insurance plan, which will pay the sum assured in lump-sum to the policy nominee upon the policyholder’s untimely death during the policy tenure.
  • This policy will only have one exclusion, and that is suicide.
  • No other benefits/riders/ variants/options shall be offered apart from the riders and benefits mentioned in the Annexure.
  • Saral Jeevan Bima shall be provided to individuals without any limitations on gender and place of residence.
  • For regular and limited premium payment policies, the death benefit will be the highest of

-10 times of the yearly premium.

-105 percent of all the premiums paid as on the date of death,

-total amount assured to be paid on death.

  • For single premium policies, the death benefit will be the highest of

– 125 percent of the single premium,

-total amount assured to be paid on death.

  • The minimum entry age will be 18 years, and the maximum will 65 years and the policy term will be between 5 years to 40 years.
  • Since it will be a pure term life insurance, so there will be no maturity benefit.
  • Saral Jeevan Bima will mandatorily offer a sum assured between Rs 5 lakh to Rs 25 lakh. However, IRDAI has allowed the life insurers to offer a higher sum assured as well without altering any conditions.
  • This standard individual term life policy will offer three premium payment options – single premium, regular and limited premium payment term for 5 years and 10 years.
  • There will be 45 days waiting period from the beginning of the policy, and during these 45 days, only death due to an accident will be covered.

So, if you were searching for a term life policy but was confused due to its various terms and condition, then here is the solution. Saral Jeevan Bima is a pure protection plan with easy to understand guidelines and shall be available with all life insurance companies. All you need to do is wait for its launch and then buy it.

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