11 Nov, 20

Life Insurance Companies to Offer Standard Term Plans

According to recent reports, only 35% of Indians have a health insurance cover. Among other reasons for low penetration, complex policies, high premiums, and lack of adequate information are the most significant. In this regard, the Insurance Regulatory and Development Authority of India (IRDAI) introduced a standard term insurance plan for the convenience and better […]

By Qrius

According to recent reports, only 35% of Indians have a health insurance cover. Among other reasons for low penetration, complex policies, high premiums, and lack of adequate information are the most significant. In this regard, the Insurance Regulatory and Development Authority of India (IRDAI) introduced a standard term insurance plan for the convenience and better understanding of policyholders. The plan is known as ‘Saral Jeevan Bima’.

Here is all you need to know about the new standard plan.

The IRDAI mandate

The IRDAI, on 15 October 2020, mandated all insurance companies to offer a standard term life insurance plan with effect from 1 January 2021. The standard term insurance, called ‘Saral Jeevan Bima’, is an individual term policy with simple features and similar terms and conditions across all insurance companies. The policy is structured to appeal to the needs of an average customer.

What is meant by standard term policy?

The standard term plan, Saral Jeevan Bima, is a non-linked, individual term life insurance. The policy is also non-participating, and a pure term insurance plan, which provides a lump sum payment in case of unfortunate death of the life insured, during the policy tenure.

Apart from the benefits, riders, variants, and exclusions mentioned in the policy annexure, no additional advantages are offered. The pure term insurance will have the same features, aids, inclusions and exclusions across all insurance companies. However, the prices, service and the claim settlement process might be different.

A standard term insurance plan is available for all individuals irrespective of gender, domicile, occupation, or educational qualifications.

Features of standard term plan

Here are some of the most important features of the Saral Jeevan Bima term insurance:

Features	Standard
Minimum and Maximum entry age	18 years and 65 years, respectively
Policy tenure	Between 5 to 40 years
Maximum age at maturity	75 years
Minimum and Maximum Sum Assured	?5,00,000 and ?25,00,000, respectively. Option to extend the cover over ?25,00,000 under the same policy
Premiums	Regular premiums, restricted premium tenure for 5 and 10 years, and single premium
Mode of premiums	Annual, Semi-annual and monthly for regular and premium payments. Lump-sum payment for single premium
Death benefit	In the case of regular and limited premiums, the death benefit is the highest sum of: 1) 10 times the annualised premium 2) 105% of overall premiums paid till date 3) The specific sum assured payable on death In the case of single premium policies, the death benefit is the highest sum of: 1) 125% of single premium 2) The specific sum assured payable on death
Maturity benefit or surrender value	NIL
Exclusions	Suicide
Waiting period	45 days from the date of the beginning of the risk
Riders	Only accident benefit and permanent disability

Overall, the standard term insurance aims to provide a convenient and easy term life plan solution to customers of all social segments, thereby, ultimately increasing the penetration of term insurance in India. Any specific changes in the policy will be issued by the IRDAI time-to-time. However, be careful while choosing an insurance provider and always make an informed decision.

Sources:

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Life Insurance Companies to Offer Standard Term Plans

The IRDAI mandate

What is meant by standard term policy?

Features of standard term plan

what is qrius

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