The current global scenario caused by the coronavirus feels like a scene from a horror movie, where it seems hard to survive without having a prevailing fear of death, as the world around seems to be falling apart.
As we already know, apart from the lingering risk of life and health, the pandemic has also created a prevalent economic crisis in almost every country, which in turn has affected every sector in the world whether it's a small chai kiosk, food or manufacturing sector, agriculture sector, insurance companies. Everyone has been affected, and people are losing their jobs and livelihoods.
As much as people are fearing the COVID-19 virus, they are also getting more anxious about the future. Questions like, "What will happen if they do not survive? Who will take care of their family?" are in everyone's mind.
In order to ease this anxiety and tension, and make the situation easier during such stressful times, the Indian Regulatory and Development Authority of India (IRDAI), which works in the insurance sector, came up with a new policy which allows everyone to be eligible for an insurance claim.
Saral Jeevan Bima: The Standardized Insurance Policy
The IRDAI (the Indian Regulatory and Development Authority of India) has come up with a new standardized insurance policy which will commence from December 31, 2020. This new policy has been named as the 'Saral Jeevan bima' that directly translates to 'easy life policy'.
The policy states that all life insurance companies must abide by this standardized policy product whose guidelines were shared with them this Wednesday by the IRDAI itself.
It also includes the coronavirus insurance plan, which is a relief for the common man who otherwise would not have been able to afford the high hospital bills and other emergency situations.
Not every customer has the required time or knowledge to make well-informed choices for choosing a better insurance product. Hence, in order to provide better-equipped service to all its customers, IRDAI came up with this policy which will be available to every customer and not just the ones who can afford to pay 3 to 5 lakh as the eligibility criteria for insurance.
This policy, which has been written under simple terms and conditions, removes the eligibility criteria to opt for any insurance policy and allows an individual with any economic background to take the benefit of having insurance.
Industry experts have also backed this move and have pointed out that a standard terms plan written in simple language, will not only boost the confidence of a customer to buy a plan but will also help insurance companies increase their customer base.
Therefore, all life insurance companies are expected to file this product with the IRADIA at the end of this year.
Need for a New Standardized Policy
According to the IRDAI's recent press release, "There are several term products within the market with various terms and conditions. Customers who cannot devote adequate time and energy to create aware selections realize it troublesome to pick the correct product."
It read, "The product might not be available out there for the intended sum assured. To require care of this example and to meet the requirements of the average clients, it's felt necessary to introduce a customary, individual term life assurance product, with straightforward options and customary terms and conditions. Such a customary product can be good, and it is easier for the purchasers to make a good choice, which enhances the trust between the Insurers and also the insured ones, and cut back mis-selling/ misleadings similarly to potential disputes at the time of claim settlement."
Naval Goel, CEO & Founder of PolicyX.com, said, "At this moment, the major problem that the term plan is facing is eligibility. For most of the life insurance companies, eligibility of an income of Rs 3 lakh+ or Rs 5 lakh+ is needed, which means that 98 percent of the Indian population can not insure themselves under a term plan."
He added, "If companies start offering small sum assured plans for the lower-income segment, it will surely help in the penetration of the term plan. Moreover, the standard term plan offering will come out with ease of decision making and will boost the confidence of customers while investing in the plan."
Features of Saral Jeeven Bima
Until recently, not every citizen of the country could afford to buy an insurance plan. Keeping this in mind, the IRDAI came up with new changes in the old policy, making it accessible to everyone regardless of their economic background.
This policy's new features are as follows:
- The minimum age to apply for this policy plan is 18 years, and the maximum is 65 years.
- Policy term will last from 5 to 40 years in totality.
- This product has no exclusion criterion, except for the exclusion of suicide.
- An astounding feature of this policy happens to be that the sum assured which will mandatorily be offered, will range from 5 lakh to 25 lakhs.
- IRDAI allows a higher assured sum to be paid at the condition of change in the policy.
- The assured sum will be given to the customer or nominee in one installment, or collectively, in case the life assured dies during the policy term.
- A maximum maturity age of 70 years will be implemented.
- No loan would be allowed against this policy.
- No maturity benefits will be provided.
- This policy provides three premium payment options that include; Regular Premium; Limited Premium Payment Term for 5 years and 10 years; and, Single Premium.
- Different modes assigned for paying these premium payments: Regular and Limited Premium can be paid through half-yearly or monthly (under specific conditions of NACH/ESH), whereas the single premium can be paid in a lump sum.
Death Benefits of Saral Jeevan Bima
The death of a family member by a tragic accident can bring about a storm in common people's life emotionally as well as financially if they do not have any backup plan for their livelihood.
Considering this, IRDAI came up with new changes in the life insurance policy with altered death benefits. A death benefit is a payment to the beneficiary on a life insurance policy upon the death of the policyholder.
According to the new policy, the death benefits include:
- Absolute amount to be paid on death for all the three payment options.
- The policies of regular and limited premium payment would provide 10 times the annualized premium that was decided whereas the single premium payment has no absolute specification.
- The regular and limited premium payment would provide 105% of all premiums paid at the date of death, where this number of 105% would increase to 125% in case of single premium payment at the date of death.
- There are no maturity benefits, as this policy is a pure term life insurance policy.
- This insurance policy plan will cover death from an accident, and there will be a waiting period of 45 days from the start of the policy.
- This policy will offer optional accident benefits and permanent disability rider.
Overall, this initiative is a good standardized product launched by IRDAI, which can benefit the majority population of India. Since in the previous years, the eligibility criteria were too high compared to what the average families or individuals could actually afford, many people were not fortunate enough to live off on an insurance plan.
But with this plan, there is a possibility to introduce more masses to the concept of insurance. This will also lead to an increase in the customer base of the insurance companies, and in turn, better service will be provided to customers without any intimidation by insurance terms and conditions.
All in all, owing to the current backdrop of the COVID-19 pandemic, there is an increased awareness among the public regarding insuring their health and family protection. Hence, this new standardized insurance policy has the capability to pave the way towards a secured and healthier country.