All life insurance companies are required to issue a standard individual term life insurance policy called ‘Saral Jeevan Bima’ as of January 1, 2021. On Wednesday, IRDAI has shared guidelines with all life insurance companies on the standard individual term life insurance product. “There are many term products on the market with different terms and conditions. Clients who cannot devote adequate time and energy to make informed decisions have a difficult time selecting the right product. It is considered necessary to introduce an individual life insurance product standard with simple features and standard terms and conditions, “IRDAI said in a circular.
Industry experts are pleased with the introduction of mandatory pure life insurance as they believe it will help the inclusion and penetration of insurance in the country. “This is a large measure of IRDA. Currently, the biggest problem with the temporary plan is that for most companies an eligibility of 3 lakh + or 5 lakh + of income is required, which means that 98% of the Indian population is not eligible for a temporary plan. If companies present a small sum insured plan for the lower income segment, this will definitely help in the penetration of the term plan. In addition, the offering of standard term plans will help facilitate decision-making and will increase the confidence of customers when buying the plan, “says Naval. Goel, CEO and Founder of PolicyX.com.
The IRDAI in its circular has asked all life insurance companies to present the product at the IRDAI no later than December 31 of this year. “However, insurers can present the product earlier and offer the same with approval even before January 1, 2021,” said IRDAI.
These are the features of the standard individual term life insurance policy – Saral Jeevan Bima:
> Saral Jeevan Bima will be a pure risk premium individual life insurance policy that will pay the insured sum in a lump sum to the nominee in the event of death of the insured life during the term of the policy.
> There will be only one exclusion under the policy: exclusion for suicide ”.
> The minimum entry age will be 18 years and the maximum age will be 65; The term of the policy will be from 5 to 40 years.
> Saral Jeevan Bima will allow a maximum age of maturity of 70 years.
> Standard term life insurance will obligatorily offer an insured sum between ₹5 lakh and ₹25 lakh. However, IRDAI allows life insurance companies to also offer a higher insured sum, without changing any conditions.
> The Saral Jeevan Bima policy will provide three premium payment options: regular premium, 5-year and 10-year limited premium payment term, and single premium
> Individuals will be able to choose between paying the regular premium over the term of the policy, the one-time payment of the premium in a lump sum, or the limited premium payment options (5, 10 years).
> The death benefit will be as follows:
–For regular and limited premium payment policies, the death benefit will be, the higher of – 10 times the annualized premium or, 1 to 5% of all premiums paid on the date of death, or a absolute amount insured to be paid on death.
– For single premium policies, the death benefit will be greater than – 125% of the single premium, or the absolute amount that is assured to be paid in the event of death.
> Since it is a pure term life insurance plan, there is no maturity benefit.
> There will be a waiting period of 45 days from the start of the policy. During these 45 days, the policy will only cover death by accident.
> Saral Jeevan Bima’s policy will also offer an accident benefit and a permanent disability rider.
.
