In recent years, it has been noticed that there is an increase in the preference of the customers when it comes to the pure term life insurance products. Keeping in mind the growing demand, innovative protection products have been introduced by the life insurers with different features, benefits, riders, options, and so forth.
The IRDAI has introduced a new standardized insurance plan and all the life insurance companies have to abide by the standardized policy product guidelines.
The standard individual term life insurance product will be called the ‘Saral Jeevan Bima’. The name of the insurer will be prefixed to the name of the product.
The life insurers are allowed to transact the new business and offer the standard term insurance product the ‘Saral Jeevan Bima’ from 2021, January 01. The product could be filed by the insurers by 2020, December 01. The insurers could also file the product earlier and then offer the same upon approval before 2021, January 01.
Standard Term Insurance Plan
What is it?
It is the simple insurance policy that will pay the nominee a fixed amount after the death of the policyholder
Why should you buy?
For Policy holders aged
18 - 65 Years
Policy Coverage For
5 - 40 Years
Minimum Sum assured
Maximum Sum assured
Single, Regular Or Limited Pay
45 Days from Policy issuance
Your premium is decided on age at which you buy the policy and remains same, throughout your life
Premiums can increase between 4-8% each year after your Birthday
Your policy application could be rejected or premiums increase by 50-100%, if you develop a lifestyle disease
Today, there are a plethora of term insurance products easily available in the market with different terms and conditions. When it comes to making an informed choice, it is expected from the customers to devote sufficient energy and time to make the right selection of the product. Besides, the products might not be accessible for the sum assured intended.
To deal with such a situation and to make accessible the product by all the life insurers that would meet the requirements of an average customer, a need was felt to introduce the standard and individual term life insurance product with standard terms and conditions and simple features.
Such a product will help the customers to make an informed and wise choice and the trust will also be enhanced between the insurer and the insured. This will also lead to reductions in the misselling and potential disputes during claim settlement.
Exercising the powers of the Insurance Act within Section 34(1) (a), the life insurers have been directed to offer the standard term life insurance product mandatorily.
The New Saral Jeevan Bima policy is the non-linked and non-participating individual pure risk premium life insurance plan that will provide for the payment of the sum assured in the lump sum to a nominee in case the life assured passes away during the policy period.
Apart from the riders and benefits stated in the annexure, there will not be any other benefits/riders/variant/options offered. There will not be any exclusion within the product apart from the suicide exclusion.
The Saral Jeevan Bima will be offered to the individuals regardless of the restrictions on travel, gender, occupation, place of residence or the educational qualifications. The terms and conditions of the Saral Jeevan Bima term plan will be the same among all life insurers. However, the premium rate might differ from insurer to insurer. The Saral Jeevan Bima premium rate will be determined based on the various factors like age, income of policy buyer, gender, etc. The policyholder can make use of Saral Jeevan Bima premium calculator to determine the premium rate of the policy.
The insurers will have to file the product as per the above-mentioned parameters and complying with the regulatory provisions via ‘File and Use’. The policy documents and the different terms and conditions of this standard product will be available in the format specified.
The below table shows the eligibility criteria of the Saral Jeevan Bima:
|Entry Age||18 Years||65 Years|
|Policy Term||5 Years||40 Years|
|Maturity Age||---||70 Years|
|Sum Assured||₹5 Lacs||₹25Lacs* (Sum assured would be permitted in the multiple of ₹50,000) *The insurers have the alternative of offering the sum assured beyond ₹25 lakh within Saral Jeevan Bima with the other terms and conditions will remain the same|
In the below table, let us understand the features and parameters of the Saral Jeevan Bima:
|Large Sum Assured Rebate||In case of anything, it will be indicated with ‘File and Use’|
|Options of Premium Payment||Single-premium
Limited Premium Payment for a 5-years or 10-years term
|Premium Payment Mode||Single-premium: In a lump sum
Limited and Regular Premium Payment: Yearly or half-yearly and monthly (only within NACH/ECS)
|Death Benefit||For the Single-premium policy: Higher of 125 percent of the single-premium and absolute amount assured that will be paid upon the demise
For Limited and Regular Premium Payment policy: Highest of 10 times of the AP, absolute amount assured that will be paid upon demise or 105 per cent of the paid premiums as on the date of demise
|Maturity Benefit||No maturity benefit under this policy|
|Warning Period||45-days from the date of the beginning of risk. In case the policy has been revived, the waiting period will not be applicable
The policy will provide death coverage due to accident only during the 45 days waiting period from the date of commencement of risk. If the life assured dies due to an accident during the waiting period then an amount equal to 100% of the premium paid excluding the taxes will be paid to the nominee and no sum assured amount will be paid. The plan will be nullified in case the life assured commits suicide within 12 months from the date of commencement of risk
|Exclusions||As per the extant regulations, only suicide clause|
|Surrender Value||No surrender value within this policy|
|Loan||No loan will be permitted against the policy|
|Policy Cancellation Value||The policy cancellation value will be payable:
When the policyholder applies for the equivalent before the date of maturity stipulated in case of the single-premium policy
When the policyholder applies for the equivalent before the date of maturity stipulated or the end of the revival term when the policy has not been revived in case of the limited premium payment policy
|Pricing||As per the ‘File and Use’|
|Optional Riders||An approved accident benefit and the permanent disability riders could be attached
The riders are add-on coverage offered by the policy to enhance the coverage of the policy. The policyholder can add rider options to the base plan by paying an extra premium along with the basic premium of the policy. The rider sum assured will be the assured amount payable in case of any specific event covered under the rider happens and opted by the policyholder
|Interest Upon Delayed Premiums||As per the policy of the insurer for similar product|
|Medical Requirements and Underwriting||As per a Board Approved Underwriting Policy of an insurer and also subject to the criteria above and other statutory requirements|
As the new standard Saral Jevaan Bima policy is available to all life insurance companies from 1st January, the registration process of the policy is very simple. All the eligible applicant who wants to apply for this scheme can follow few simple steps to apply for the plan. let’s take a look at the online and offline process to apply for new Saral Jeevan Bima Policy.
The following are the important documents required for the Saral Jeevan Bima Term Plan.
For any first-time buyer, the plan is going to be a boon as it will have the same benefits, features, exclusions and inclusions across all the life insurers, however, the prices may vary. To estimate the premium rate of the policy, the customers can also use Saral Jeevan Bima Policy premium calculator.
The uniformity in the policy wordings and exclusions will leave negligible scope for any disputes in the prospective times. The key intent behind introducing the standard life insurance product is that the present life insurance products accessible in the market are different and somewhat complex, which makes it slightly difficult for the common man to understand the different inclusions and exclusions.
Owing to the present backdrop of COVID-19, there is an increased awareness in regards to the health and family security among the people. The Saral Jeevan Bima will surely help with the penetration of term plans and target the masses across all income groups. The standard term plan will hopefully ease the process of decision making and boost consumers when investing in the insurance plan.