News Excerpt
Recently, The Insurance Regulatory and Development Authority of India (Irdai) has announced guidelines on standard individual term life insurance product — Saral Jeevan Bima.
All life insurance companies will mandatorily have to offer the standard product with effect from January 1, 2021.

Pre-Connect
Similar to the standardised health insurance product Arogya Sanjeevani, Saral Jeevan Bima is a standard term insurance policy for individuals. It is a pure risk plan (non-linked non-participating) where the coverage and payout are the same across insurers. The name of the policy too is to be the same, but prefixed by the name of the insurer. As per the guidelines, the product is to be offered to individuals without restrictions on gender, place of residence, travel, occupation or educational qualifications.

Analytica
Significance of Saral Jeevan BimaYojna
•    A 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.
•    While the on-boarding and underwriting process could vary with insurers, any individual aged between 18 and 65 years can buy this policy.
•    The policy term is for five to 40 years and he/she has the option to pay premium regularly, or for a limited period (5-10 years), or as a single payment (lumpsum).
•    The premium payment can be made either monthly, quarterly, half-yearly or yearly. The minimum sum assured (SA) is ₹5 lakh and the maximum cover can go up to ₹25 lakh.
•    The riders are also limited, restricted to accident benefit and permanent disability. The standard term plan offers only level cover where the sum assured remains constant along with the premium amount throughout the life of the insured.

Benefits of the Saral Jeevan BimaYojna
    Saral Jeevan Bima could come in handy for those policyholders looking for plain vanilla term covers. The product offers lumpsum payout only, unlike other term plans in the market.
    The nominee will receive, in case of death of policyholder, the higher of: 10 times the annualised premium, 105 per cent of all premiums paid as on date of death, or absolute SA.
    In the case of single premium policies, higher of either 125 per cent of all premiums paid or absolute SA.

Disadvantage of Saral Jeevan BimaYojna
    Unlike other term plans, Saral Jeevan Bima comes with a waiting period of 45 days from the date of commencement of the policy.
    This policy will cover only death due to accident during the waiting period. In case of death of policyholder other than due to accident during the waiting period, then the insurer will pay only 100 per cent of all premiums received (excluding taxes) to the nominee.
    There is no maturity benefit or return of premium paid if the policyholder survives the policy term.
    Given that existing term insurance products are competitively priced with various riders and payout options, not many insurers will be keen to push this standard term product to their customers.
    Also, it is left to the insurers to increase the cover beyond the maximum limit of ₹25 lakh; it remains to be seen if this will be done.
    Also, while the features of this plan are uniform, the premiums are to be decided by each insurer.

The Insurance Regulatory and Development Authority of India (IRDAI)
It is an autonomous, statutory body tasked with regulating and promoting the insurance and re-insurance industries in India.
Mission
    To protect the interest of and secure fair treatment to policyholders
    To bring about speedy and orderly growth of the insurance industry (including annuity and superannuation payments), for the benefit of the common man, and to provide long term funds for accelerating growth of the economy;
    To set, promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those it regulates;
    To ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery;
    To promote fairness, transparency and orderly conduct in financial markets dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players;
    To take action where such standards are inadequate or ineffectively enforced;
    To bring about optimum amount of self-regulation in day-to-day working of the industry consistent with the requirements of prudential regulation.