Term insurance policy is essential for financial protection against the risk of premature death. If the breadwinner dies, the family needs adequate financial reserves to help them meet their lifestyle expenses and financial responsibilities. A term insurance plan does exactly that and becomes important in financial planning. Given the importance of term insurance, every insurance company offers this coverage. In addition, modern day plans have become widespread and offer a range of coverage benefits to policyholders. Understanding these benefits and choosing an affordable plan can be challenging and hence the Insurance Regulatory and Development Authority of India (IRDAI) has introduced the concept of a standard term insurance plan called Sarva Jeevan Bima. Let’s see what this plan is-
What is a simple life insurance?
Saral Life Insurance is a standardized term insurance plan that will be offered by all insurance companies with uniform coverage facilities. The scheme will launch on 1 January 2021 and insurance companies are required to file this product with IRDAI by 1 December 2020. The coverage benefits, exclusions and eligibility parameters of the plan will be the same across all insurance companies. However, the premium rate can be decided by companies based on their pricing policies.
Key Features of Saral Life Insurance
Here are some of the salient features of simple life insurance for your knowledge –
- You can choose the assured amount within the minimum and maximum limits in multiples of INR 2.5 lakhs.
- You can pay the premium once, for a limited period or during the policy term, depending on your ability.
- The plan has no maturity benefit
- On death, more of the following will be paid –
- 10 times the annual premium or 1.25 times the single premium
- sum assured
- 105% of the total premium paid till death for limited or regular premium plans
- You can opt for two riders for a wider scope of coverage. Permitted riders include Accident Benefit Rider and Permanent Disability Benefit Rider
- There is no surrender value or loan payable under the plan
- Death will not be covered within 45 days of purchasing the policy due to accidents
- There is no conclusion in this plan except suicide. If the insured commits suicide within one year of purchasing or reviving the plan, the death benefit will not be paid only the premium paid will be refunded
Simple Life Insurance Eligibility Conditions
Here’s a look at all life insurance eligibility conditions and coverage criteria –
|Age of entry||18 years||65 years|
|Age of maturity||23 years||70 years|
|Term of policy||5 year||40 years|
|sum assured||INR 5 Lakh||INR 25 Lakh|
|Premium payment term||Regular Premium – During the policy term Limited Premium – 5 years or 10 years Single Premium – One Time|
What does the plan mean to you?
Saral Life Insurance is a right step towards standardization of insurance plans. Given the range of policies available in the market with complete coverage, choosing the best plan can prove difficult, especially when you are short on time. In addition, it may not be possible for many to assure a large amount. Simple life insurance eliminates these difficulties and allows you to buy a term plan with decent coverage at affordable premiums. You can also compare the plan in insurance companies on the basis of its premium as other facilities will be same. Therefore, it will be easier for you to compare and buy term insurance plans.
What does the plan mean for insurance companies?
For insurance companies, this standardization is beneficial. As the policy is easy to understand and insurers are easy to buy, you can sell the plan over-the-counter and increase your revenue. Furthermore, as the scheme has become popular, insurance penetration is expected to increase. Insurers can target low-income individuals who want suitable coverage at affordable costs and provide them with much-needed insurance cover and promote their business at the same time.
Therefore, a life insurance plan is beneficial for both customers and insurance companies and once the plan is introduced, it is expected to be popular.