Make Insurance Simple – the Insurance Regulatory and Development Authority of India (Irdai) has directed all the life insurance companies to bring simplified easy to understand standard life term plans. This standard policy will be called – ‘Saral Jeevan Bima’ and companies have to mandatorily launch it from January 1, 2021.
With Arogya Sanjeevni Policy, the Insurance regulator made a similar move of standardizing health insurance policy. Now this will be implemented for life term plans too. The aim is to ensure that more and more people are encouraged to buy a simple life cover. The term plan will be worded similarly, will have simple feature and standard terms and condition, all the 24 life insurance companies have to put a common name in the prefix, i.e. Saral Jeevan Bima followed by the companies name.
IRDAI in a circular, said “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 and products may not be available for the intended sum assured.”
‘Roti, Kapada, Makaan Aur Insurance’- This is how Kuljit Singh Kohli, Founder, Trust Financial Services, describes this move. He says “IRDAI’s directive on Saral Jeevan Bima is a path-breaking move by the Regulator to provide basic Life Cover to each & every household in India, it’s a very simple and straightforward approach towards protection.”
How ‘Saral’ is ‘Saral Jeevan Bima’ Policy?
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It will be a basic term policy giving cover to the covered individual’s family in case of his death.
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The policy will be offered to people in the age group of 18-65 years. The policy term would be 5 to 40 years with a maximum maturity age of 70 years.
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The sum assured will be between Rs 5 lakh and Rs 25 lakh. However, companies can provide a sum assured of more than 25 lakh, but in doing so, they can’t change any terms and condition of the policy.
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This policy will have only one exclusion, i.e. in case of death by suicide.
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There will be a waiting period of 45 days from the commencement of the policy. During these 45 days, the policy will only cover death due to an accident.
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Premium payment could be a single premium or limited premium payment for a block of 5 or 10 years and a regular payment option.
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On the death of the policyholder, his family would receive ten times of the annualized premium or 105% of the total premium paid or the amount assured to be paid on death.
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In case of a single premium, the grieved family will get 125% of the premium or the amount that was assured to be paid on death.
A move in the right direction, but is it enough? “Post COVID the awareness level & need for Life Insurance Coverage has increased manifold. However, easy accessibility for a common man to enroll in a pure term plan is still not possible. Hence for the success of this initiative, it’s very important for IRDA to mandate a minimum compulsory percentage of Saral Jeevan Bima business to be done by each Insurance company measured in terms of sum Assured out of the total business done by any Insurance company in each Financial year,” says Kuljit Singh Kohli of Trust Financial services. He feels apart from simplifying the policy the regulator has to push its adoption at the ground level and for that “IRDA can draw a guideline to issue Special License to Family Doctors (GPs) and local KIRANA shop owners to enroll the general public for this SARAL plan with a point of sale (POS) TAB linked directly to the company’s server to ensure instant issuance of the policy up to a certain cover value say 5 lac or 10 lac,” suggests Mr. Kohli.
Let us hope simpler term policy not only encourages people to buy a basic term plan but also helps to reduce the massive mis-selling that happens in the garb of complicated terms and condition.
