As per the Irdai press release issued on October 15, 2020, “All life insurers permitted to mandatorily offer the standard product with effect from 1st January, 2021. The product may be filed by the Insurers latest by 1st December, 2020.”
Santosh Agarwal, CBO-Life Insurance, Policybazaar.com said, “In another attempt to make insurance affordable and available for all, the IRDAI has issued a circular to all life insurers directing them to come up with a standard individual term life insurance product which will be named ‘Saral Jeevan Bima.’ Just like the standard health insurance product ‘Arogya Sanjeevani’, the individual term life insurance product will also be the same across all insurers. The product across insurers will have the same features, benefits, inclusions, and exclusions. Though the prices, service level, claim settlement rate may differ.”
Here are the details of the standard term insurance policy, according to IRDAI’s press release.
Features of Saral Jeevan Bima
- “Saral Jeevan Bima” is a non-linked non-participating individual pure risk premium life insurance plan, which provides for payment of Sum Assured in lump sum to the nominee in case of the Life Assured’s unfortunate death during the policy term.
- Apart from the benefits and riders stated in the Annexure, no other riders / benefits / options / variants shall be offered. There shall be no exclusions under the product other than the suicide exclusion.
- The product shall be offered to individuals without restrictions on gender, place of residence, travel, occupation or educational qualifications, as per the release.
15 important features of the standard term policy
|1||Minimum Age at Entry||18 Years|
|2||Maximum Age at Entry||65 Years|
|3||Policy Term||5 to 40 years|
|4||Maximum Maturity Age||70 years|
|5||Sum Assured||Minimum 5,00,000; Maximum 25,00,000* (SA would be allowed only in the multiple of 250,000)|
|6||Premium Payment Options||Regular Premium; Limited Premium Payment Term for 5 years and 10 years; Single Premium|
|7||Mode of Premium Payment||Regular and Limited Premium Payment Options: – Yearly; Half Yearly; Monthly (only under ECS / NACH) Single Premium: In Lump sum|
|8||Death Benefit||For Regular & Limited Premium Payment policies: Highest of:|
– 10 times of annualized premium;
– 105% of all the premiums paid as on the date of death;
– Absolute amount assured to be paid on death
For Single premium policies: Higher of:
|9||Maturity Benefit||There shall be no maturity benefit under the policy.|
|10||Optional Riders||Approved Accident Benefit and Permanent Disability Benefit Riders can be attached.|
|11||Loan||No loan will be allowed against the policy|
|12||Exclusions||Only suicide clause, as per extant regulations.|
|13||Waiting period||45 days from the date of commencement of risk. In case of revival of Policy, the Waiting Period shall not be applicable.|
|14||Surrender Value||Surrender Value is not applicable under this Policy.|
|15||Interest on delayed payment of premiums||The rate of interest on delayed payment of premiums shall be as per the Insurer’s policy for similar products.|
*Insurers have the option of offering Sum Assured beyond Rs 25,00,000 under Saral Jeevan Bima with all other terms and conditions remaining the same.
As per the release, “The Insurer may suitably modify the definitions and other clauses of the policy contract prospectively based on the regulations or guidelines that may be issued by the Authority from time to time.”
The need for standardisation of term life policy
According to the Irdai press release, “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. Also, products may not be available for the intended sum assured. To take care of this situation and to make available a product by all life insurers that will broadly meet the needs of an average customer, it is felt necessary to introduce a standard, individual term life insurance product, with simple features and standard terms and conditions. Such a standard product will make it easier for the customers to make an informed choice, enhance the trust between the Insurers and the insured, and reduce mis-selling as well as potential disputes at the time of claim settlement.”
Naval Goel, CEO & Founder of PolicyX.com said, “At this moment, the major problem that the term plan is facing is of the eligibility. For most of the life insurance companies eligibility of Rs 3 lakh + or Rs 5 lakh + income is needed, which means that 98 per cent of the Indian population can not insure themselves under a term plan. If companies starts offering small sum assured plan for lower income segment, it will surely help in penetration of term plan. Moreover, standard term plan offering will come out with ease of decision making and will boost the confidence of customers while investing in the plan.”