Insurance companies to offer a standard term life insurance from January 12 min read . Updated: 28 Dec 2020, 07:50 AM IST
IRDAI had asked all the life insurance companies to file the product with the IRDAI latest by December 31 this year.
IRDAI, in October had directed all the life insurance companies to mandatorily come out with a standard, individual term life insurance policy called 'Saral Jeevan Bima' from January 1, 2021. Following the guidelines, insurance companies will start to offer the standard term life insurance in the new year. IRDAI had asked all the life insurance companies to file the product with the IRDAI latest by December 31 this year.
"There are many term products in the market with varying terms and conditions. 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," said IRDAI in its circular dated October 14, 2020.
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What is Saral Jeevan Bima Policy?
Saral Jeevan Bima will be an individual pure risk premium life insurance policy which will pay the sum assured in lump sum to the nominee in case of death of the life assured during the policy term. There will be only one exclusion under the policy - exclusion for suicide'.
Saral Jeevan Bima policy will also offer optional Accident Benefit and Permanent Disability Rider.
The standard term life insurance will mandatorily offer a sum assured between ₹5 lakh and ₹25 lakh. IRDAI however allows life insurance companies to offer a higher sum assured as per their discretion, without changing any conditions.
Minimum entry age will be 18 years and maximum age will be 65 years, policy term will be 5 to 40 years. Saral Jeevan Bima will allow a maximum maturity age of 70 years.
Premium payment options
Saral Jeevan Bima policy will provide three premium payment options -- regular premium, limited premium payment term for 5 years and 10 years and single premium. Individuals will be allowed to choose from regular premium payment throughout the policy term, single premium payment in lumpsum or limited premium payment (5, 10 years) options.
-> For regular and limited premium payment policies, the death benefit will be, highest of - 10 times of annualised premium or, 1-5% of all premiums paid as on the date of death , or an absolute amount assured to be paid on death.
-> For single premium policies, the death benefit will be higher of - 125% of single premium , or absolute amount assured to be paid on death.
Since it is a pure term life insurance plan, there is no maturity benefit.
Waiting period of 45 days from the commencement of the policy will be there. During these 45 days, the policy will only cover death due to an accident.