HomePersonal FinanceLife InsuranceSaral Jeevan Bima - New Term Insurance Guideline by IRDAI

Saral Jeevan Bima – New Term Insurance Guideline by IRDAI

Saral Jeevan Bima Term Insurance Plan

 

Saral Jeevan Bima – Term Insurance – Term Plan is a widely accepted product. However, terms and conditions of the term plan offered by different insurance companies are different. Every company was introducing innovative products with different features, options, and riders.

Different term plans with different features are creating confusion among customers. It is extremely difficult for the customer to compare policy features and take a buying decision.

To help customers IRDAI has issued a new guideline for the term insurance policy. This guideline is for standardizing terms and conditions of the term plan. It will be called Saral Jeevan Bima. Saral Jeevan Bima will be a standard term plan with simple features and standard terms and conditions.

It is a welcome step by IRDAI. This step will make the life of the customer easier. It will enhance trust between the insurance company and its customers. This step will also help in preventing the mis-selling of insurance policies. Before this IRDAI has released a guideline for standardizing terms and conditions for health insurance policies – Arogya Sanjivani.

Here is detail guideline announced by IRDAI for standard term insurance – Saral Jeevan Bima.

Saral Jeevan Bima – New Term Insurance Guideline by IRDAI

The standard term insurance plan shall be called “Saral Jeevan Bima”. All insurance policies will prefix Saral Jeevan Bima before the product name.

It will be a non-linked and non-participating pure term plan which will cover the risk of individual life. No additional saving or investment component will be attached to this plan. This term plan guarantees payment of sum assured to the nominee, incase policy holder’s die during the policy term.

Only specific riders can be offered. No additional benefits, options, variants shall be offered to the policyholder. No exclusion is allowed under this policy except suicide exclusion. This policy shall be offered to individuals without any restrictions on gender, place of residence, travel, occupation or educational qualifications.

The terms and conditions document of Saral Jeevan Bima would be standard. Key Features and other parameters of this plan as per IRDAI guidelines are given below.

Sr. No.DescriptionFeatures
1Entry Age18 years to 65 years
2Policy Term5 years to 40 years
3Maximum Maturity Age70 years
4Sum Assured

 

 

 Minimum 5 Lakh to Maximum 25 Lakh*

(SA would be allowed only in the multiple of Rs.50000)

*Insurers have the option of offering Sum Assured beyond 25 Lakh under Saral Jeevan Bima with all other terms and conditions remaining the same.

5Premium Payment OptionsSingle Premium – Lump sum

Regular Premium – Monthly, Half Yearly & Yearly

Limited Premium Term for 5 years and 10 years

6Death BenefitFor 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:

–       125% of single premium;

–       absolute amount assured to be paid on death.

7Maturity BenefitNone
8ExclusionsOnly suicide clause
9Waiting period45 days from the date of commencement of risk. In case of revival of Policy, the Waiting Period shall not be applicable.

The following words shall be prominently displayed in BOLD, on the welcome letter of Policy Document as well as on the first page of Sales Literature.

“This Policy will cover death due to accident only 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% of all premiums received excluding taxes, if any, shall be paid and the Sum Assured shall not be paid.”

10Surrender ValueSurrender Value is not applicable under this Policy.
11Policy Cancellation ValuePolicy Cancellation Value shall be payable:

–      Upon the Policyholder applying for the same before the stipulated date of maturity in case of Single Premium Policy;

–      Upon the Policyholder applying for the same before the stipulated date of maturity or at the end of revival period if the policy is not revived, in case of Limited Premium Payment Policies.

The amount payable shall be calculated differently in single premium and limited premium policy. For regular premium policy no cancellation value shall be payable.

12LoanNo loan will be offered against the policy
13Optional RidersAccident Benefit and Permanent Disability Benefit Riders

The policy guideline suggested above for the term plan Saral Jeevan Bima shall be applicable from 1st January, 2021.

Take Away

It is a very good step by IRDAI. This step is likely to give the following benefits.

  • As the terms and conditions of a term plan are standard, it is likely to increase term insurance adoption across India.
  • The policy premium of this plan will be low as sum assured under this policy is restricted to 25 Lakh.
  • As it is an affordable policy lower-income group will also purchase Saral Jeevan Bima.
  • Suggested Features and Benefits of this policy is really Saral (Simple) and easy to understand.
  • As it is a standard product and governed by the guideline of IRDAI, the chance of mis-selling and disputes at the time of claim settlement will be low.

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Shitanshu Kapadia
Shitanshu Kapadiahttp://moneyexcel.com/
Hi, I am Shitanshu founder of moneyexcel.com. I am engaged in blogging & Digital Marketing for 10 years. The purpose of this blog is to share my experience, knowledge and help people in managing money. Please note that the views expressed on this Blog are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment advice or legal opinion. We do not offer any stock tips, investment, insurance or finance product related advice. Please consult a qualified financial planner and do your own due diligence before making any investment decision.
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