However, insurers have the option of offering sum assured beyond Rs 25 lakh under Saral Jeevan Bima with all other terms and conditions remaining the same.
The Insurance Regulatory and Development Authority of India (Irdai) has announced guidelines on standard individual term life insurance product — Saral Jeevan Bima. All life insurance companies will mandatorily have to offer the standard product with effect from January 1, 2021.
This product is a non-linked, non-participating individual pure risk premium life insurance plan, which provides for payment of sum assured in lump sum to the nominee in case of the policyholder’s death during the policy term.
According to the Irdai, “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. To take care of this situation and to make available a product by all life insurers that will broadly meet the needs of an average customer, it is felt necessary to introduce a standard, individual term life insurance product, with simple features and standard terms and conditions.”
The minimum sum assured will be Rs 5 lakh and the maximum sum assured would be Rs 25 lakh. However, insurers have the option of offering sum assured beyond Rs 25 lakh under Saral Jeevan Bima with all other terms and conditions remaining the same.
There will be a waiting period of 45 days from the date of commencement of risk. However, this policy will cover death due to accident only during the waiting period of 45 days from the date of commencement of risk.
In the last few months, demand for term plans has surged because of the current pandemic. Market participants say that this standard product will reduce mis-selling and disputes at the time of claim settlement. The minimum entry age for this product is 18 years and maximum entry age if 65 years. The policy term will be for 5 to 40 years.
Santosh Agarwal, CBO – life insurance, Policybazaar.com said, “For the first-time buyers of life insurance, the plan will be a boon since the product is the same, regardless of the company offering it. An important reason for introducing a standard life insurance plan is that current life insurance products available in the market are different and quite complex, and it is difficult for the common man to understand the various inclusions and exclusions of the plans.”