Personal Finance

What does standard insurance policy mean

Bavadharini KS | Updated on April 10, 2021

Coverage, riders are same across insurers

Two neighbours’ daily routine of watering plants leads to an interesting conversation.

Sindu: Each plant is unique and has its own requirements in terms of sunlight, water and nutrients.

Bindu: Yes. There is no standard procedure to follow when it comes to plant care.

Sindu: I agree. I think that’s why gardening is an art. But in other matters, standardisation might work for the better, like in insurance.

Bindu: Yes, you are right. It is so difficult to understand every insurance product and its features, what it covers, what it doesn’t, and finally make a choice.

Sindu: That’s true. In recent months, the insurance regulator IRDAI has introduced guidelines for standard insurance policies to be launched by insurance companies. These products will help overcome the challenge you just mentioned.

Bindu: By standard policies you mean those where the coverage is the same across insurers, right?

Sindu: Yes. They are same not only in terms of coverage, but also other features, including riders, policy distribution methods and policy names.

Bindu: Ok. What are the standard products that we have?

Sindu: So far, the regulator has introduced Arogya Sanjeevani (standard health policy), Saral Jeevan Bima (standard term insurance), Saral Pension (annuity product) and other products such as personal accident cover and home insurance. IRDAI has even laid down the guidelines for standard Covid-19 policies Corona Kavach and Corona Rakshak. Standard cyber insurance cover too is likely to be launched.

Bindu: Okay. If it is the same features and coverage across insurers, it doesn’t matter which insurer we choose, does it?

Sindu: May be not! While IRDAI has laid down the guidelines for coverageand features, the premiumto be charged for the policy is left to the discretion of the insurer. Hence, you can select an insurer based on the premium charged.

Bindu: Oh! I didn’t know that the premium could be different with each insurer.

Sindu: There is a stark difference in premium among the insurers for the same policy. This can be due to the difference in factors such as the on-boarding process, medical check-up, network hospitals and claim settlement processes followed by each insurer.

Bindu: But whatever said, these standard policies come in handy for those who don’t have any basic policy and for those who don’t have any clue on insurance policies or selection.

Sindu: That is so true. Basic insurance is better than nothing at all.

Published on April 10, 2021

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