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Saral Jeevan Bima, the upcoming new standard life insurance policy, will add to the financial security of the commoners and families with lower incomes.
In addition, it also addresses the long-felt need for a simple policy without the complication of trying to understand the terminology of a policy document.
Even for an educated person, the wordings of an insurance policy are difficult to understand, as there are many term products in the market with varying terms and conditions.
With a great difficulty in making choices, customers generally depend on advice of an agent or intermediary, which may also leadto subscribing to a wrong policy and mis-selling by some agents. It is in this regard that a standard policy – where all features are similar – will make buying insurance easy.
Affordability
Even though pricing of the policy is yet to be decided by insurers, which will be done as part of the product filing norms of the regulator, the fact that the range of life cover has been kept at ₹5 lakh to ₹25 lakh will surely make it somewhat affordable to commoners, especially those who do not havehave access to insurance.
According to IRDAI data, insurance penetration in India has declined since 2009, and things started improving from 2015, though it has been very tardy.
While the penetration of insurance as a percentage of premium to the Gross Domestic Product (GDP) was at 3.44 per cent in 2015, it edged up to 3.70 per cent in 2018 (2019 data is not yet available).
Penetration of life insurance alone was at 2.71 per cent in 2015. It remained the same in 2016, increased to 2.76 per cent in 2017 and decreased to 2.74 per cent in 2018.
By making a life insurance policy simple to understand and affordable with a low sum insured, Saral Jeevan Bima is expected to drive growth in the reach of life insurance, going forward.
The regulator’s move to introduce the Saral Jeevan Bima product will also give a big push to standardisation of the insurance products in both life and non-life sectors. It can be seen as a logical sequence after the introduction of the standard health insurance product, Aarogya Sanjeevani, besides standard Covid-specific policies such as Carona Kavach and Corona Rakshak.
Industry view
Industry experts have also welcomed the move. “The circular is in line with the requirements of the industry and the country. We welcome the move of a standard product that will surely help increase the awareness of protection plans, especially during these uncertain times,” Bharat Kalsi, Chief Financial Officer, Bajaj Allianz Life, told BusinessLine . A product of this construct will also help in insurance penetration within the country, he added.
“As the sum insured provided under the policy is restricted to ₹25 lakh, it is a good option for those who don’t have life insurance as of now,” said Santosh Agarwal, Chief Business Officer-Life Insurance, Policybazaar.com.
“This policy can also be considered as the 11 policy for Bharat, which is providing a minimum sum assured at much lower premium rates,” he said.
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