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As people’s interest in life insurance, especially term plans for pure protection has grown, the insurance regulator has issued guidelines for standard individual term life insurance policy Saral Jeevan Bima. The standard product will help those who cannot devote adequate time and energy to make informed choices and find it difficult to select the right product.

The regulator has underlined that 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 claim settlement. All life insurance companies will have to mandatorily offer this policy from January 1 next year.

Pure risk plan

Saral Jeevan Bima will be a non-linked non-participating individual pure risk premium life insurance plan, which will pay the sum assured in lump sum to the nominee in case of the life assured’s death during the policy term. Non-participating means the policy is not eligible for a share of profit depending upon the company’s experience. There will be no maturity benefit and no surrender value under this policy. The policy will be offered to individuals without restrictions on gender, place of residence, travel, occupation or educational qualifications.

The minimum and maximum entry ages will be 18 years and 65 years respectively. The policy term will be 5- 40 years and the maximum maturity age 70 years. The minimum sum assured will be Rs 5 lakh and the maximum will be Rs 25 lakh. The premium payment options will be regular premium, limited premium payment term for 5 and 10 years and

single premium.

The product will have the same features, benefits, inclusions and exclusions across all life insurers though the prices may differ. For the first-time buyers of life insurance, the plan will be a boon since the product is the same, regardless of the insurance company offering it.

Waiting period, death benefit

The waiting period will be 45 days from the date of commencement of risk and in case of revival of the policy, the waiting period will not be applicable. The policy will cover death due to accident only during the waiting period of 45 days from the date of commencement of risk.

In case of death of the life assured other than due to accident during the waiting period, an amount equal to 100% of all premiums received excluding taxes will be paid and the sum assured will not be paid. This policy will be void if the life assured commits suicide at any time within 12 months from the date of commencement of risk.

In case of regular and limited premium payment policies, the death benefit will be highest of either 10 times of annualised premium, or 105% of all the premiums paid as on the date of death or absolute amount assured to be paid on death. For single premium policies, it will be higher of 125% of single premium or the absolute amount assured to be paid on death.

The Free Look period will be 15 days (30 days if the policy is an electronic policy or is purchased through distance marketing) from the date of receipt of the policy document by the policyholder. The insurer may seek proof of continued insurability from the policyholder to decide revival of the policy. This includes a form of declaration of good health, medical reports, special reports and any such document as may be called for by it.

Rider options

Insurers can offer approved accident benefit and permanent disability benefit riders. Rider is an add-on benefit which the proposer will have to purchase separately in addition to basic benefits as specified under this policy document. The rider premium will be in addition to the premium paid under the base policy towards the additional cover/benefit opted under the rider. The rider sum assured will be the assured amount payable on happening of a specified event covered under the rider and opted by the policyholder.