Money & Banking

Insurers welcome plan for standard term insurance product

Surabhi Mumbai | Updated on October 02, 2020 Published on October 02, 2020

The term insurance products are less complex than endowment and ULIP plans, and can be bought easily through digital means   -  Getty Images

Though term products offer death benefit or sum assured in case of an unfortunate event, insurers say there can still be many variations

Consumers looking to buy a term insurance product may soon have the option of a standard product.

Coming in the backdrop of the Covid-19 pandemic that has led to rising demand for protection products in the life insurance segment, the regulator’s plan for a standard term product has also been welcomed by insurers.

IRDAI Chairman Subhash Chandra Khuntia had recently said the regulator plans to introduce a standard term insurance product which would be introduced by all insurers.

“It becomes much easier for policyholders to buy such products,” he had said, but he did not give further details.

Though a term insurance has a standard objective of providing a death benefit or the sum assured to the consumer in case of an unfortunate event, insurers point out that there can still be a large number of variations.

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“Some products have to be simple in the way they are delivered and consistent so that the mass population can make a decision without having to think about what is hiding behind a product. In that context, for a large part of the customer segment, to offer such standardised product is a very interesting concept,” said Satyan Jambunathan, Chief Financial Officer, ICICI Prudential Life Insurance Company.

He pointed out that even in term insurance, there can be a range of products — in the way the premium is paid, which can be single pay, limited pay or regular pay. Similarly, the benefit can be lumpsum, income, or income for five, 10, 15 years. Products can also have critical illness cover, covering a varied number of such illnesses, he further pointed out.

Noting that term insurance products are less complex than endowment and ULIP plans, and can be bought easily through digital means, Santosh Agarwal, Chief Business Officer, Life Insurance, Policybazaar.com, said that the only difference one sees when buying a term plan from different companies is that the benefit of riders and add-ons are different and unique to different companies.

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“Customers may want to analyse claim settlement rates, other benefits like critical illness, accidental death, hospitalisation, and waiver of premium,” she further noted.

Ravi Krishnamurthy, President Zone I, SBI Life Insurance, too welcomed the move, and said that many people in the country may not be able to choose between plans.

“The IRDAI’s objective is to make the definitions simple and transparent. Some customers can make a decision based on solution advisory but a standard product is the need of the industry and makes it more agnostic to insurance companies and more customer-centric,” he had told reporters at a recent press conference.

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Published on October 02, 2020
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