The insurance providers are ready to roll out a standard term insurance policy with the name of 'Saral Jeevan Bima’ in India and this will for sure heat up the term insurance business. In October 2020, the IRDAI (Insurance Regulatory and Development Authority of India) has directed all the life insurance providers to introduce a standard term insurance policy for insurance buyers from 01st January 2021. This plan will have standard (uniform) terms and conditions throughout all the insurance providers and its sum assured will range from Rupees. Five lakhs to Rupees. 25 lakhs.
Since the onset of the Coronavirus pandemic, insurance providers are witnessing an exciting trend in term insurance purchase. In the last nine months, the demand for term insurance has risen significantly. Most of the term insurance providers have seen a growth of approximately 35% to 40% in their business of term life insurance. Seeing this trend, we can say that Covid – 19 has increased the demand for term insurance plans especially among those who have financial dependents.
However, as per some records, many consumers have purchased term insurance plans with an inadequate cover that may not be sufficient to meet their financial requirements in case of some unfortunate event. To overcome this problem, Saral Jeevan Bima can be proved as a reliable solution for enhancing the existing coverage and avail a term plan with an appropriate sum assured.
The sudden rise in the demand for term insurance plans because of uncertainties of life in this pandemic has made IRDAI feel the need for a standard term insurance plan that can give an advantage to all. The likelihood of people in pure protection plans like a term insurance policy has made it a requirement to launch a term plan that can easily be understood by all. Even though term insurance plans are there in the Indian insurance market for a long time now, but the basic target audiences are still the same.
Term life plans majorly target high salaried people, graduates, postgraduates, and self-employed and those who have high net value, and people who are living in tier 1 and tier 2 cities. Because of this, term insurance was out of reach of lower-income people of the society. In India, there are approximately 10 crore families that have a single breadwinner who takes care of the financial requirements of four to five people.
In such circumstances, it is necessary to provide life insurance coverage to the breadwinner by offering him/her a term insurance plan with adequate cover.
One big reason why people in India do not invest in term life insurance plans is the lack of proof of regular income. Regular income proof is the topmost eligibility to buy a term insurance plan. According to a report of the Central Board of Direct Taxes, out of the 1.35 billion population of India, only six crore people file income tax returns. This directly says that only six crore people in India are qualified for purchasing a term insurance plan.
Therefore, to overcome such challenges and to offer adequate financial protection to people with a lack of financial resources, a Standard Life Insurance policy – Saral Jeevan Bima is launched.
There are no restrictions attached to this policy like restrictions related to education, income proof, location, etc. for purchasing this policy, a large population of approximately 50 crores, comes under the lower group of India, will have access to the term insurance plan.
For making this product within the reach of all the target customers, the Saral Jeevan Bima is priced according to the risk extent that it covers. All the customers can avail of a discount of up to 20% over the premiums when buying this plan online. Keeping the capacity of spending and earning of the people who come under the lower-income group in mind, this policy provides the option to purchase it in monthly installments without the requirement to pay the premium as a lump sum.
This standard term insurance policy will for sure play a vital role in expanding the business of term insurance in India and it will also increase the penetration rate in the insurance sector with relatively larger and new customers. The insurance regulatory always emphasizes the requirement of offering simple insurance products with easy-to-understand language so that maximum people can come under the umbrella of insurance. With Saral Jeevan Bima policy the regulator is predicting that the customers who are needing a term insurance plan can make an informed decision. This standard term insurance policy is expected to play a major role in improving the trust between the customers and insurance providers and may reduce the dispute that mostly arises at the time of claim settlement.