The Insurance Regulatory and Development Authority of India (Irdai) has come out with a standard, individual term life insurance product called Saral Jeevan Bima.
This will be mandatorily offered by all life insurance companies from January 1, 2021, onwards.
Insurers have to file the product with the regulator latest by December 1.
The Saral Jeevan Bima product to be offered by all life insurance companies will be a non-linked non-participating individual pure-risk premium life insurance plan.
It will pay the sum assured in lump sum to the nominee in case of the life assured’s death during the policy term.
Prior to this, the regulator had brought in a standard health product called Arogya Sanjeevani and standard Covid products – Corona Kavach and Corona Rakshak.
Under the standard term product, there will be no exclusions, other than suicides.
The product will be offered to individuals without restrictions on gender, place of residence, travel, occupation or educational qualifications. “…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,” said Irdai.
The minimum sum assured under the product will be Rs 5 lakh; the maximum can go up to Rs 25 lakh.
However, the insurer will have the option of providing sum assured beyond Rs 25 lakh.
While the minimum age of entry is 18 years, the maximum has been capped at 65.
The maximum maturity age will be 70 years.
The policy term will extend from 5 to 40 years.
“The plan is largely targeting the lower-income group i.e., 20-25 per cent, for whom term life insurance becomes the last priority due to higher premiums.
“This policy can also be considered the policy for Bharat, which is providing a minimum sum assured of Rs 5 lakh to Rs 25 lakh at much lower premium,” said Santosh Agarwal, chief business officer-life insurance, PolicyBazaar.
Experts say it is good for people who do not have life insurance yet.
And, the premium will be lower than what is charged for term products on offer now.
“The pricing will depend on the customer profile accessed by distributors and the spread of risk.
“It could be different from the term plan, because it is a simplified product with a simplified process,” said R M Vishakha, MD & CEO of IndiaFirst Life Insurance.