Home >Money >Personal Finance >Why India's first Saral Jeevan Bima is twice the price of a regular term plan?

Edelweiss Tokio Life Insurance Co. Ltd has launched India’s first standard term insurance plan called Saral Jeevan Bima, which is aimed at first-time buyers and those who may not have easy access to existing term plans. A term plan pays out the sum assured in case of the insured’s death.

The Insurance Regulatory and Development Authority of India (Irdai) in October had mandated all life insurers to launch the Saral Jeevan Bima plans from 1 January 2021, with simple features and standard terms and conditions to ensure that every individual, irrespective of their socioeconomic background gets access to financial protection.

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The products launches got delayed as the regulator and the insurers were in discussions over the flexibility in terms of the maximum sum assured and the pricing.

We look at what this new plan offers, who should buy this plan and whether costlier pricing of the Saral Jeevan Bima will defeat the product’s purpose of deepening the insurance penetration in the country.

Edelweiss Tokio’s Saral Jeevan Bima plan offers sum assured in the range of the 5 lakh to 25 lakh, which can be selected in the multiples of 50,000. Individuals can choose the policy and the premium paying terms starting from five years till 40 years.

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“People who are not eligible to buy regular term products due to the unavailability of regular income proof and required educational qualification can now easily invest in a term life insurance," said Santosh Agarwal, chief business officer, life insurance,, an online marketplace for insurance.

In terms of pricing, a sum assured of 25 lakh under this Saral Jeevan Bima plan with a policy term of 30 years for a 30-year-old non-smoking male individual will come at a premium of 727 per month (including taxes).

However, compared with this, the company’s existing term insurance plan called Zindagi+ costs around 390 per month for similar premium paying and policy terms.

According to the company’s spokesperson, the pricing of any product is a reflection of the expected mortality experience of its target market. “We expect the demand to be pretty robust. As it is a newer customer category, product pricing and underwriting will evolve over time with availability of more data," the spokesperson said.

Explaining the reason behind higher pricing of Saral Jeevan Bima plans, Mahavir Chopra, founder,, a research platform for insurance users, said: “Insurers use demography, income category, place of residence, occupation and education level of the buyers to create term insurance products. The problem with the Saral Jeevan Bima is that there are no filters allowed, meaning that the premium will be high as the risk is high."

According to Chopra, someone who lives in the city, earns reasonably well and has an occupation, which is not hazardous, may not find this product relevant as regular term products will be cheaper.

Edelweiss Tokio also expects this product to be bought by segments where the mortality experience is likely to be higher.

Experts says the Saral Jeevan Bima may also work as an entry-level term insurance plan. The current term plans available usually offers a minimum sum assured of 25 lakh and a policy term starting at 10 years.

“Today, sum assured of 5 lakh isn’t available in the market. Some parts of the costs for distribution, policy issuance and medical underwriting are fixed. So, enabling an 5 lakh product will be more expensive proportionately than an 25 lakh product. However, from 5 lakh sum assured point of view, these plans may not be expensive as there is no alternative available in this category," said Abhishek Bondia, managing director and principal officer,, an insurance broker.

Edelweiss Tokio’s Saral Jeevan Bima plan will cost 145 per month for a sum assured of 5 lakh and a policy term of five years.

“With this product, the people who earlier did not have access to term insurance will be able to easily compare and get financial security for their family. The Saral Jeevan Bima solves for access more than standardization," said Chopra.

An individual with good educational qualification and job would find the regular term plans better due to their lower costs, but the Saral Jeevan Bima may work for first-time buyers who belongs to the lower-income segment and are looking for lower sum assured.

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