Term life insurance plan: life insurance companies will offer a standard term policy from January 1, 2021: see details here
According to the Irdai press release dated October 15, 2020, “All life insurers are authorized to offer the standard product as from January 1, 2021. The product may be deposited by the Insurers no later than December 1, 2020″.
Santosh Agarwal, CBO-Life Insurance, Policybazaar.com, said: âIn another attempt to make insurance affordable and accessible to all, IRDAI issued a circular to all life insurers asking them to to offer a standard individual life insurance product called âSaral Jeevan Bimaâ. Just like the standard âArogya Sanjeevaniâ health insurance product, the individual term life insurance product will also be the same for all insurers. The product for all insurers will have the same features, benefits, inclusions and exclusions. Although prices, level of service, claims settlement rate may differ. “
Here are the details of the standard term insurance policy, according to the IRDAI statement.
Saral Jeevan Bima Characteristics
- âSaral Jeevan Bimaâ is an unrelated, non-participatory individual life insurance plan with pure risk premiums, which provides for the payment of the sum insured in a lump sum to the nominee in the event of the unfortunate death of the insured. during the term of the policy.
- Apart from the advantages and riders mentioned in the Appendix, no other rider / advantages / options / variants will be offered. There will be no exclusion under the product other than the exclusion of suicide.
- The product is to be offered to people with no restrictions as to gender, place of residence, travel, occupation or degree, according to the release.
15 important features of the standard term policy
|1||Minimum age at entry||18 years old|
|2||Maximum age at entry||65 years|
|3||Policy term||5 to 40 years|
|4||Maximum age of maturity||70 years|
|5||Sum insured||At least 5,000,000; Maximum 25,000,000 * (SA would only be allowed in the multiple of 250,000)|
|6||Premium payment options||Regular premium; Premium payment period limited for 5 years and 10 years; Single premium|
|7||Method of payment of the premium||Regular and limited premium payment options: – annually; Semi-annual; Monthly (only under ECS / NACH) Single premium: In lump sum|
|8||Death benefit||For regular and limited premium payment policies: The greater of:
– 10 times annualized premium;
– 105% of all premiums paid on the date of death;
– Absolute insured amount payable on death
For single premium policies: Greater of:
|9||Maturity benefit||There will be no maturity benefit under the policy.|
|ten||Optional jumpers||Approved Accident Benefit and Permanent Disability riders may be attached.|
|11||To lend||No loans will be authorized against the police|
|12||Exclusions||Suicide clause only, in accordance with current regulations.|
|13||Waiting time||45 days from the start date of the risk. If the Policy is reinstated, the Waiting Period will not apply.|
|14||Surrender value||The surrender value is not applicable under this policy.|
|15||Interest on late payment of premiums||The interest rate on the deferred premium payment will be in accordance with the insurer’s policy for similar products.|
Source: IRDAI press release
* Insurers have the option of offering Sum Assured in excess of Rs 25.00,000 under Saral Jeevan Bima with all other terms and conditions remaining the same.
According to the release, “The insurer may appropriately amend the definitions and other clauses of the policy contract prospectively on the basis of any regulations or guidelines which may be issued by the Authority from time to time.”
The need to standardize term life insurance policies
According to Irdai’s press release, âThere are many futures products on the market with varying terms and conditions. Customers who cannot devote enough time and energy to make informed choices find it difficult to select the right product. Additionally, products may not be available. To cope with this situation and provide all life insurers with a product that will largely meet the needs of an average customer, it has become necessary to introduce a standard and individual term life insurance product, with such a standard product will make it easier for customers to make an informed choice, build trust between insurers and the insured, and reduce abuse sales as well as potential litigation when settling claims. “
Naval Goel, CEO and Founder of PolicyX.com, said: âRight now the major issue facing the term plan is eligibility. For most life insurance companies, eligibility of Rs 3 lakh + or Rs 5 lakh + income is required which means that 98% of the Indian population cannot insure under a term plan. If companies start offering a low amount insured plan for low income segments, it will surely help penetration of the term plan.Moreover, the standard term plan offering will be made with ease of decision making and will build customer confidence while investing in the plan. . “