Insurance firms have launched simpler offerings across categories, which make it easy for the layman to choose
The basic aim of standard plans is to provide insurance protection to everyone, boost penetration
During the coronavirus pandemic, the Insurance Regulatory and Development Authority of India (Irdai) had asked insurers to introduce standard insurance policies in all categories, whether it’s a life, health or other general insurance policy, with simple features and standard terms and conditions, keeping a view in mind that most people are buying insurance policies online due to covid. In today’s piece, we explain what they are and how they work.
The standard term life insurance, also known as Saral Jeevan Bima, is a non-linked, non-participating individual pure risk premium life insurance policy that provides death benefit (sum assured) in a lump sum to the nominee in case the insured dies during the policy term.
The minimum sum assured offered under this policy is ₹5 lakh and the maximum is ₹25 lakh.
However, insurers have the option of offering a sum assured beyond ₹25 lakh, with all other terms and conditions remaining the same.
2. Saral Pension annuity policy
The standard individual immediate annuity product, also known as Saral Pension, offers a guaranteed return that doesn’t depend on markets or the life insurers’ profits. The plan helps an individual receive a regular payout from a life insurer, after making a lump sum or regular payment for a certain period. It has no maximum investment limit. The plan comes with two annuity options. First, life annuity with 100% return of purchase price; and second, joint life annuity and return of 100% purchase price on death of the last survivor.
This is a standard health insurance policy for individuals and families that can provide on an indemnity basis. An indemnity policy means that a policy can compensate an insured party for some unexpected damages or losses up to a certain limit. The minimum coverage that health insurers have to mandatorily offer is ₹50,000 and can go up to ₹10 lakh under this standard health insurance product. In July 2020, Irdai had allowed insurers to offer a sum insured as low as ₹50,000 under this product with no upper limit.
4. Corona Kavach covid indemnity health policy
Corona Kavach is a covid-specific product issued for the short term, i.e., for less than one year. Insurers have to mandatorily offer the Corona Kavach policy.
It covers hospitalization expenses incurred by the individual for the treatment of covid on a positive diagnosis of covid in a government-authorized diagnostic centre. The policy also covers the costs associated with PPE kits, ventilators and consultation fees, etc. You can buy this covid policy until 30 September.
5. Corona Rakshak benefit-based covid health policy
The Corona Rakshak policy is an insurance plan that offers a lump sum benefit equal to 100% of the sum insured, which will be payable on a positive diagnosis of covid. The individual will require hospitalization for a minimum continuous period of 72 hours.
As in the case of the Corona Kavach policy, in this case also, the positive diagnosis of covid has to be from a government-authorized diagnostic centre.
It is a short-term policy that can be bought until 30 September.
6. Mashak Rakshak health policy
It is a standard vector-borne disease policy that will provide a lump sum benefit equal to 100% of the sum insured (excluding the amount paid under diagnosis cover) on a positive diagnosis of any of the following vector-borne diseases requiring hospitalization for a minimum continuous period of 72 hours: dengue fever, malaria, filaria, chikungunya, Japanese encephalitis and zika virus. This policy is available from 1 April.
7. Standard personal accident insurance policy
The standard personal accident cover will be offered on an individual basis. If it is offered as a family cover, then the chosen sum insured will apply to each family member separately. The minimum sum insured will be ₹2.5 lakh and the maximum will be ₹1 crore. Health insurers have to mandatorily offer a standard personal accident insurance policy from 1 April onwards.
8. Bharat Griha Raksha policy
The Bharat Griha Raksha policy is meant for covering home-building and/or home contents. The policy also offers in-built covers for loss of rent and rent for alternative accommodation, apart from providing cover for removal of debris and payment of architects’, surveyors’ and consulting engineers’ fees.
9. Bharat Sookshma Udyam Suraksha policy
This policy is meant for enterprises where the total value at risk at any one location is up to ₹5 crore. The policy covers startup expenses, professional fees, removal of debris, costs compelled by municipal regulations, floater cover for stocks, etc. Besides, the policy can be issued for a term not exceeding 12 months.
10. Bharat Laghu Udyam Suraksha policy
This policy is meant for enterprises where the total value at risk is more than ₹5 crore and up to ₹50 crore. It covers startup expenses, professional fees, removal of debris and costs compelled by municipal regulations, etc. It does not cover floater cover for stocks. Also, the policy can be issued for a term not exceeding 12 months.
How they stack up
Rakesh Goyal, director of Probus Insurance, said, “The basic aim of standard plans is to provide insurance protection to everyone and at the same time increase the penetration. So, standard plans are easy to understand as wordings across the insurers are the same and such policies are for people who do not have any life insurance coverage. However, on the other hand, non-standard plans have various facets and can benefit experienced policyholders."
With the introduction of these standard policies, it has now become easier for the buyer to comprehend and make an informed choice. It has also reduced misselling as well as potential disputes to an extent.
However, Naval Goel, founder & CEO, PolicyX.com, said that there is a considerable increase in the premiums for standardized policies in comparison with non-standardized ones.
The difference is already visible in the life term policies where the premium prices have gone up.
“In some cases, the premiums are twice as much as those of the existing term covers that these insurance companies have already been offering and some like Saral Jeevan Bima premiums have shot up by 25-100% than their regular policies," he said.
“With more simplified and standard terminologies, we can now observe a better penetration of policies, especially among those who used to run away from these complex terms and clauses," Goel added.