By Santosh Agarwal
During these turbulent times, the importance of term insurance has been realised by people across the spectrum. That is why the search for “term insurance” on Google has jumped and has been in demand all through the pandemic. Cleaving through these tough times, the insurance sector also witnessed a wave of positive changes ranging from launching new products to simplification of the process. By launching brand new products like Corona Kavach, Corona Rakshak, and Arogya Sanjeevani, the Insurance Regulatory Authority of India (IRDAI) made sure that buying and understanding the terms of policies should no longer remain a daunting task.
Treading the same path, with the intent of simplifying the process and bringing more people under the coverage of insurance, IRDAI has come out with a standardised term insurance policy ‘Saral Jeevan Bima’ which will be rolled out from January 1, 2021. This standardised policy will have standard wording for the sum assured with uniform features that will reduce the hassle of first-time buyers. This standard term plan will be available for buyers between 18 and 65 years of age. The maximum age at maturity is 70 years, which implies that when the person reaches that age, the plan will automatically terminate. The policy term can be between five and 40 years. This will be having a minimum and maximum sum assured of Rs 5 lakh and Rs 25 lakh, respectively.
But let us delve deeper to know how and why you should go for it.
Unlike other term plans offered by insurers, having different exclusions and conditions, this standardised product will have uniform features irrespective of the insurers. So standardisation, uniform wording, and uniform features will make it an easier buy for people cutting across class and all sections. With relatively complex life insurance products available in the market, a saral term insurance product will help first-time buyers and people who do not have much knowledge of term insurance. Uniformity and standardisation will reduce the hassle associated with buying any policy and will leave no room for disputes in the future.
This standardised product will be actively available on digital platforms. The availability of this plan on digital platforms will offer more transparency and will lead to no ambiguity. Most importantly, customers can avail a discount of up to 20% on the premiums when buying the plan online. Now, comparing premiums across the insurers, and buying the cheapest policy for you will be just a few clicks away. There will be no more hassle to turn to an agent to get all the information.
Unlike other term plans which consider your annual income as a fundamental premise to decide the amount of the sum assured, this term insurance plan allows you to buy the sum assured as per your wish without taking into consideration your annual income.
In order to buy the Saral Jeevan Bima plan, presenting your income proof is not requisite as the insurer will issue you a policy without taking into consideration your financial status. It is helpful for those with an irregular income or people who do not have sufficient income proof. You can buy the plan up to a sum assured for which you think you can pay the premium. This new offering is of great benefit for the people belonging to lower-income groups or people from rural backgrounds who were earlier not covered under any policy.
The plan primarily targets those from economically weaker sections of society who also equally need to be insured under a term cover to protect their dependents from financial crises. Often, it is observed that in families from lower-income groups, there is just one breadwinner who takes care of all the financial needs of the family. In such a scenario, it is very important to cover the breadwinner under a term plan because if anything unfortunate happens to them, there would be enough financial aid to care for the needs of the dependents.
Since the product is going to be launched very soon, policy buyers should know what are the various things one should look at. As it goes that buying insurance is one thing and getting your claim settlement is another. So essentially if you are going to buy this product, apart from comparing the premium, the policy buyer should also look at the solvency ratio and the claim settlement ratio of the company.
The solvency ratio of an insurer shows the health of the company and its ability to meet its obligations. But, this can’t be looked at in isolation. The claims settlement ratio is the percentage of claims paid out of the total claims received. Generally, a higher claim settlement ratio signifies the convenience of getting your claim processed. Now, as this plan is just a few days away from being launched, have a look at the aforementioned parameters and prepare for buying this brand new product.Last Tuesday, regulators met with executives of Alibaba and five other major Chinese internet companies and warned them not to abuse their dominance to drive out competitors through use of exclusive contracts, predatory pricing and other tactics, according to a statement by the State Administration of Market Regulation.
Santosh Agarwal is Chief Business Officer of Life Insurance at Policybazaar.
Views expressed are the author's own.
