A term life insurance policy provides a family with financial security and consolation following the breadwinner’s death. Though term policies are meant to be straightforward, Indian insurers apply quite a few characteristics to them in reality, making the option challenging. The insurance regulator, IRDAI, has come up with recommendations for Saral Jeevan Bima to fix this. As of January 1, 2021, all life insurers shall sell this offering.
What is it?
Saral Jeevan Bima is the regular term insurance scheme for people, equivalent to the standardised life insurance product Arogya Sanjeevani. It is a pure (non-linked non-participating) risk package where coverage and payment through insurers are the same. The name of the contract may be the same, but the name of the insurer must be prefixed. The commodity must be sold to individuals without limitations on ethnicity, place of residence, transport, profession or educational qualifications, as per the guidelines.
Why is it important?
Term insurance is a must-have life cover for an individual. The main objective of launching a standard term product is to ensure that it is simple to select and easy to purchase. Although the method of on-boarding and signing will differ with insurers, this policy can be obtained by any person between 18 and 65 years of age. The insurance term is for five to 40 years and he/she has the option of paying the premium on a monthly basis, or as a fixed payout (lump sum) for a short time (5-10 years). It is possible to make the subscription charge either weekly, quarterly, half-yearly, or yearly. The minimum guaranteed amount (SA) is ⁇ 5 lakh, and up to ⁇ 25 lakh can be the highest protection.
Why should I care?
For those policyholders searching for plain vanilla term covers, Saral Jeevan Bima might come in handy. Unlike other term plans in the industry, the package offers lumpsum payouts only. In the event of the death of the policyholder, the nominee will receive a higher premium of: 10 times the annualized premium, 105% of all premiums charged as of the date of death, or absolute SA. In the case of single premium plans, either 125 per cent or absolute SA of all premiums charged is higher.
But on the downside, Saral Jeevan Bima, unlike other term proposals, has a waiting time of 45 days from the date of programmed commencement. This proposal would only protect mortality during the waiting time due to an injury. In the event of the death of a policyholder rather than due to an injury during the waiting period, only 100% of all payments collected (excluding taxes) will be paid to the nominee by the insured.