A term insurance policy is a must for financial protection against the risk of premature death. If the breadwinner dies, the family needs sufficient financial reserves to help them meet their lifestyle expenses and financial responsibilities. A term insurance plan does exactly that and becomes important in financial planning. Given the importance of term insurance, every insurance company offers this coverage. Moreover, modern day term plans have become comprehensive and offer a range of coverage benefits to policyholders. Understanding these benefits and choosing an affordable plan might become challenging and so the Insurance Regulatory and Development Authority of India (IRDAI) has introduced the concept of a standard term insurance plan called Saral Jeevan Bima. Let’s have a look at what this plan is all about–
What is Saral Jeevan Bima?
Saral Jeevan Bima is a standardized term insurance plan which would be offered by all insurance companies with a uniform set of coverage features. The plan would launch on 1st January 2021 and insurance companies are required to file this product with IRDAI by 1st December 2020. The coverage benefits, exclusions and eligibility parameters of the plan would be uniform across all insurance companies. However, the premium rate can be fixed by the companies based on their pricing policies.
Salient features of Saral Jeevan Bima Premium
Here are some of the salient features of Saral Jeevan Bima for your knowledge –
- You can choose the sum assured within the minimum and maximum limits in multiples of INR 2.5 lakhs
- You can pay the premium once, for a limited period or throughout the policy tenure depending on your affordability
- The plan does not have any maturity benefit
- On death, higher of the following would be paid –
- 10 times the annual premium or 1.25 times the single premium
- Sum assured
- 105% of total premiums paid till death for limited or regular premium plans
- You can opt for two riders for a comprehensive scope of coverage. The riders allowed include Accident Benefit Rider and Permanent Disability Benefit Rider
- There is no surrender value or loan payable under the plan
- Death within 45 days of buying the policy, except due to accidents, would not be covered
- The plan has no exclusions except suicide. If the insured commits suicide within a year of buying or reviving the plan, the death benefit would not be paid only the premiums paid would be refunded
Eligibility conditions of Saral Jeevan Bima
Here’s a look into the eligibility conditions and coverage criteria of Saral Jeevan Bima –
|Entry age||18 years||65 years|
|Maturity age||23 years||70 years|
|Policy tenure||5 years||40 years|
|Sum Assured||INR 5 lakhs||INR 25 lakhs|
|Premium paying term||Regular premium – throughout the policy tenure
Limited premium – 5 years or 10 years
Single premium – once
What does the plan mean for you?
Saral Jeevan Bima is a right step in the direction of standardizing term insurance plans. Given the range of policies available in the market with exhaustive coverage, choosing the best plan might prove difficult, especially when you are short on time. Moreover, affording a very high sum assured might not be possible for many. Saral Jeevan Bima overcomes these difficulties and allows you to buy a term plan with decent coverage at affordable premiums. You can also compare the plan across insurers based on its premium because the other features would be the same. So, comparing and buying a term insurance plan would become easier for you.
What does the plan mean for insurers?
For insurance companies, this standardization is beneficial. As the policy is simple to understand and easy to buy insurers can sell the plan over-the-counter and increase their revenue. Moreover, as the plan becomes popular, insurance penetration is expected to increase. Insurers can target low-income individuals who want suitable coverage at affordable costs and provide them with the much-needed insurance cover and boost their business at the same time.
The Saral Jeevan Bima plan is, therefore, beneficial for both customers and insurance companies and once the plan is launched, it is expected to become popular.