The Insurance Regulatory and Development Authority of India (Irdai) has directed all life insurance companies to offer a standard term insurance plan – Saral Jeevan Bima – from January 1 next year.
“Customers who cannot devote adequate time and energy to make informed choices find it difficult to select the right product. Also, products may not be available for the intended sum assured. So we felt the need to introduce a standard, individual term life insurance product, with simple features and standard conditions,” 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 a claim settlement,” the regulator added.
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. The standard term life insurance will mandatorily offer a sum assured between Rs 5 lakh and Rs 25 lakh. The Irdai, however, allows the life insurance companies to offer a higher sum assured as well without changing any conditions.
The Saral Jeevan Bima will have no maturity benefit and will have a 45-day waiting period. On exclusions in the policy, the guidelines said “only suicide clause, as per extant regulations”.
It further said the product should be offered to individuals without restrictions on gender, place of residence, travel, occupation or educational qualifications.
The regulator feels such a standard product will reduce instances of mis-selling and disputes at the time of claim settlement.
In its circular, the Irdai asked all the life insurance companies to file the product with the Irdai latest by December 31 this year. “However, insurers may file the product earlier and offer the same on approval even before January 1, 2021,” the insurance regulator said.