3 min read.Updated: 15 Oct 2020, 11:08 AM ISTAvneet Kaur
IRDAI in its circular has asked all the life insurance companies to file the product with the IRDAI latest by December 31
'However, insurers may file the product earlier and offer the same on approval even before January 1, 2021,' says IRDAI.
All life insurance companies have to mandatorily come out with a standard, individual term life insurance policy called 'Saral Jeevan Bima' from January 1, 2021. IRDAI has shared guidelines with all life insurance companies on standard individual term life insurance product on Wednesday. "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 a circular.
Industry experts are happy with the introduction of mandatory pure life insurance as they believe it will help in inclusion and insurance penetration in the country. "This is a great move by IRDA. Currently the biggest problem with term plan is that for most companies eligibility of 3 lakh+ or 5 lakh + income is required, which means that 98% of the Indian population are not eligible for a term plan. If companies come up with small sum assured plan for lower income segment, this will definitely help in penetration of term plan. Also standard term plan offering will help in ease of decision making and boost the confidence of customers while buying the plan," says Naval Goel, CEO & founder of PolicyX.com .
IRDAI in its circular has asked all the life insurance companies to file the product with the IRDAI latest by December 31 this year. "However, insurers may file the product earlier and offer the same on approval even before January 1, 2021," said IRDAI.
Here are the features of the standard, individual term life insurance policy - Saral Jeevan Bima :
> 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'.
> Minimum age of entry will be 18 years and maximum age will be 65 years; policy term will be 5 to 40 yerars.
> Saral Jeevan Bima will allow a maximum maturity age of 70 years.
> 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 well, without changing any conditions.
> 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.
> Death benefit will be as follows:
--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.
> There will be a waiting period of 45 days from the commencement of the policy. During these 45 days, the policy will only cover death due to an accident.
> Saral Jeevan Bima policy will also offer optional Accident Benefit and Permanent Disability Rider.
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