Saral Jeevan Bima has made it easier for people with comparatively less educational background and those falling under low-income profile to get coverage under a pure protection plan.
The long-running COVID-19 pandemic, which began last year in India and is still ongoing, has taught us all some of the very crucial financial lessons with financial security being the most important learning. In the last 15 months, the demand for insurance products has increased by many folds as people across all age groups are on a scramble to purchase the right insurance products – mostly health and life insurance – for financial protection against any unforeseen circumstances.
Most insurers have also reported a significant year-on-year growth in the indemnity and protection segment. In fact, with the introduction of standardized term and health insurance plans, the insurance penetration rate of the country has received a much-needed boost. As directed by the Insurance Regulatory and Development Authority of India (IRDAI), insurers have launched the standard term life insurance plan – Saral Jeevan Bima and standard health insurance plan – Arogya Sanjeevani. With the introduction of standard insurance products in the market, a new category of customers is emerging where protection cover is meant for all. The major boost is coming from the lower-income group, which has emerged as a new category.
What the Trends Speak
Talking about Saral Jeevan Bima, the plan has made it easier and convenient for people with comparatively less educational background and those falling under low-income profile to get coverage under a pure protection plan. This standard term life insurance plan has a much higher issuance rate for the lower-income segment groups or people with limited educational qualifications in comparison with regular term life insurance plans.
For those who aren’t aware of term insurance plans, a term plan covers your life for a large cover amount with a very small premium that you pay (For example, a 25 year old person can get a life cover of Rs 1 crore for 25 years at a premium of around Rs 500 per month). As per the available trends, Saral Jeevan Bima enjoys maximum popularity amongst people who do not have regular income proofs and those who are self-employed.
The average income of people opting for Saral Jeevan Bima is Rs 3 – Rs 3.5 lakh and over 70% of the plans are being bought by people falling under the 31-50 years age group. This is mostly because people in their early 30s and late 40s usually have some of the important expenses to take care of that include paying for children’s education and marriage and repaying loans like home and car loans while also simultaneously planning for a safe and secured retirement. Moreover, the share of female buyers for Saral Jeevan Bina is also significantly high in comparison to regular term insurance plans.
As the features, as well as the terms and conditions of the Saral Jeevan Bima, are the same across insurers, the key differentiators are the pricing and eligibility. While buying the plan, customers must compare the premium and consider the claim settlement ratio of the insurers. In the insurance industry, the claim settlement ratio is termed as the percentage of insurance claims settled by an insurer out of the total number of claims received.
For instance, if the claim settlement ratio of an insurer is 98%, this means that the insurer has settled 98 death claims out of 100 claims received. The other important factor to consider is the eligibility. Every insurer differs in terms of documents required, education and income slab etc. It is important to compare and understand which plan will the customer be eligible for in order to avoid rejection post going through the entire process.
The introduction of Saral Jeevan Bima is being seen as a revolutionary move in the life insurance industry as it will bring maximum people under the insurance umbrella and mostly those falling under lower income group. The minimum and maximum entry age for Saral Jeevan Bima plan is 18 years and 65 years, respectively, with the policy term ranging between 5 and 40 years. The maximum age up to which a person can be covered is 70 years. Coming to the life cover amount, the minimum cover amount that customers can opt for under the Saral Jeevan Bima policy is a minimum of Rs 5 lakh while the maximum cover amount currently available from most of the insurers is Rs 25 lakh.
(By Sajja Praveen Chowdary, Head-Term Life Insurance, Policybazaar.com)