Saral Jeevan Beema for Bharat: Irdai introduces standard life product

The insurance regulatory and development authority of India (Irdai) has come out with a standard individual term life insurance product, to be known as “Saral Jeevan Bima”, which will be mandatorily offered by all the life insurance companies from January 1, 2021 onwards.

The insurers have to file the product with the insurer latest by December 1, 2020.

The Saral Jeevan Bima product to be offered by all the life insurance companies will be 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. Under the standard term product, there will be no exclusions, other than suicides. And, the product will be offered to individuals without restrictions on gender, place of residence, travel, occupation or educational qualifications.

The minimum sum assured under the product will be Rs 5 lakh, and the maximum can go upto 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 entry age has been capped at 65 and the maximum maturity age will be 70 years. The policy term will extend from 5 to 40 years.

The product will offer three premium payment options; regular premium, limited premium payment term for 5 years and 10 years, and single premium.

As far as death benefit is concerned, for regular and limited premium payment policies, it will be 10 times of annualised premium, or 105 per cent of all the premiums paid as on the date of death, or absolute amount assured to be paid on death, whichever is higher. Similarly, in case of single premium policies, either 125 per cent of single premium will be paid, or absolute amount assured to be paid on death, depending on whichever is higher.

While there be 45 days of waiting period post the commencement of the policy but the policy will cover death due to accident during the waiting period of 45 days from the date of commencement of risk.

“In case of death of the life assured other than due to accident during the waiting period, an amount equal to 100 per cent of all premiums received excluding taxes, if any, shall be paid and the sum assured shall not be paid”, Irdai guidelines read.

The regulator has further said that there will be no surrender value under this policy and the insurers cannot give loans to policyholders against this policy. And, the insurers can attach accident benefit and permanent disability benefit as riders to this cover.

“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 as the policy for Bharat which is providing a minimum sum assured of 5 Lakh -25 Lakh at much lower premium rates”, said Santosh Agarwal, Chief Business Officer, Life Insurance, Policybazaar.com.

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