Regulator IRDAI on Thursday asked life insurance companies to launch a standard term insurance policy ''Saral Jeevan Bima'' by January 1, 2021 to help customers take informed decisions.
The Saral Jeevan Bima will be a pure term life insurance product that can be purchased by people in the age group of 18 to 65 years and will have a policy term of 4 to 40 years, guidelines issued by the Insurance Regulatory and Development Authority of India (IRDAI) said.
The sum assured for the term life insurance policy will range from Rs 5 lakh to Rs 25 lakh (in multiples of Rs 50,000), the policy guidelines said.
"All life insurers permitted to transact new business shall mandatorily offer standard life insurance products with effect from January 1, 2021," IRDAI said while issuing the guidelines.
Observing that presence of several term products in the market with varying terms and conditions often makes it difficult for customers to make informed decision, IRDAI said, "A standard product will make it easier for the customers to make an informed choice, enhance the trust between the insurers and the insured, and reduce mis-selling as well as potential disputes at the time of claim settlement."
Commenting on the guidelines, Bajaj Allianz Life Chief Financial Officer Bharat Kalsi said it is in line with requirements of the industry and the country.
"We welcome the move of a standard product that will surely help increase the awareness of protection plans, especially during these uncertain times," he said, adding that a product of this construct will also help in insurance penetration within the country.
According to Kalsi, IRDAI has been very proactive in the COVID times and this is yet another move that will surely be beneficial for customers.
Santosh Agarwal, CBO-Life Insurance, Policybazaar.com said, "This is a great move to increase the life insurance penetration in India. People should keep in mind that the sum insured provided under the Saral Jeevan Bima policy is restricted to 25 lakh and is a good option for those who don''t have life insurance as of now."
He further said that the plan is largely targeting the lower-income group for whom term life insurance becomes the last priority due to higher premiums.
"This policy can also be considered as the policy for ''Bharat'' which is providing a minimum sum assured of Rs 5 lakh-Rs 25 lakh at much lower premium rates," Agarwal added.
As per the guidelines, Saral Jeevan Bima will have no maturity benefit and will have a 45-days waiting period. On exclusions in the policy, the guidelines said "only suicide clause, as per extant regulations".
IRDAI said Saral Jeevan Bima 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 life assured''s unfortunate death during the policy term.
It further said the product should be offered to individuals without restrictions on gender, place of residence, travel, occupation or educational qualifications