Tag: Saral Jeevan Bima

How Saral Jeevan Bima fares among term plans

Personal Finance

[ad_1]

Read More/Less


Term plans are supposed to be simple products in the life insurance space. But life insurers add different features, pay-out options and other conditions, making the selection of a term plan difficult, prompting the regulator, IRDAI, to come up with Saral Jeevan Bima.

The objective of this standard term policy is to offer simple basic life cover for policyholders across income categories. With a few insurers introducing the standard term policy in their menu, we discuss their offerings.

Cost of the cover

Saral Jeevan Bima is a plain vanilla term cover that pays the sum assured (SA) in lump sum to the nominee in case of death of the policyholder during the policy term. The policy is offered for a minimum SA of ₹50,000, up to a maximum of ₹25 lakh.

According to industry experts, the underwriting process is one of the main factors influencing the pricing of these standard products, given that the coverage is the same across insurers. For instance, Saral Jeevan Bima offered by SBI Life would cost a 30-year old individual — with a sum assured of ₹25 lakh — a premium of ₹12,479 per year. SBI Life requires an individual to undertake a physical medical check-up.

On the other hand, PNB Met Life’s premium for the same cover works out to ₹6,278 per year and doesn’t require any medical assessment. Some insurers offer tele medical facility. For instance, ICICI Pru Life, for the same ₹25-lakh cover (30-year individual), conducts a tele medical check-up before issuing the policy and the premium works to ₹9,428 per year. While medical assessment benefits the policyholder (by reducing the chance of rejection of claim in the future on medical grounds), it bumps up the premium.

The pricing of the policy is not only based on medical assessment but also depends on the income category (whether salaried or self-employed), profession and age. The higher your age, the higher will be your premium.

However, if you compare Saral Jeevan Bima with other term plans in the market, the premium seems high. For instance, the premium for Edelweiss Tokio Life’s term plan Zindagi Plus is ₹4,434 for a ₹25-lakh cover (30-year individual), while that for Saral Jeevan Bima under the same insurer works out to ₹8,259.

According to Indraneel Chatterjee, Co-Founder and Principal Officer, RenewBuy, “The premium for the standard product appears relatively high because the other term planscater to individuals usually in higher income brackets, for whom insurers will be in a position to absorb the underwriting costs and risks, given the higher coverage.” The minimum cover offered by most term policies in the market is over ₹25 lakh whereas for the standard product, the maximum coverage is itself only ₹25 lakh. For instance, in SBI Life’s eShield plan, the minimum cover is ₹35 lakh, with no limit for maximum cover.

Chatterjee further adds, “ Saral Jeevan Bima caters to those in the low and mid-income category, mostly self-employed, which explains the stark difference in the premium, though the on-boarding process is simple.”

 

Our take

You can consider this standard term plan for basic protection if you are self-employed or belong to a lower income category.(say, earning less than ₹5 lakh a year)

Though most insurers offer term plan for a minimum cover of ₹30 lakh, a few do offer SA starting at ₹25 lakh, including Max Life, PNB Met Life, Kotak Life and Aegon Life. Then in such cases, it makes sense to compare premium offered by other term plans by the insurer for more or less the same or additional cover.

But remember, as a general rule, it is good to have a cover that is at least 10-25 times your annual income. This should also be reviewed periodically, as and when your income and liabilities increase.

Although two riders — accident death and permanent disability benefit — can be offered with the standard cover, so far, no insurers have offered these.

So, all things considered, do compare the coverage, riders and other features of different offers before signing up a term policy.

For a detailed analysis of Saral Jeevan Bima, look up All you wanted to know about Saral Jeevan Bima (https://tinyurl.com/Saralbima)

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , , , , , , ,

What does standard insurance policy mean

Personal Finance

[ad_1]

Read More/Less


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.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , , , , , ,

Will Saral Jeevan Bima be a good term insurance option for you?

Personal Finance

[ad_1]

Read More/Less


In a bid to make the process of purchasing health insurance simpler, the insurance regulator IRDAI introduced a standard health insurance product — Arogya Sanjeevani.

Following this, the regulator also recently provided guidelines for standardisation in the life insurance space, through a standard term life product — Saral Jeevan Bima. All insurers are to launch the product by January 1, 2021. The launch of Saral Jeevan Bima ensures purchase of a term plan is made simple and easy.

About the policy

Saral Jeevan Bima policy is a standard term life cover as per IRDAI requirements.

It is a pure-vanilla term cover which pays the sum assured (SA) in lump-sum to the nominee in case of death of the policyholder during the policy term.

This policy is offered only to individuals aged between 18 and 65 years for a minimum policy term of five years (maximum of 40 years). The plan offers a minimum SA of ₹50,000 and a maximum of ₹25 lakh, in multiples of ₹50,000. However, insurers have the option of offering a higher SA (over ₹25 lakh), too.

We recently covered the details of the product extensively in another article, ‘All you need to know about Saral Jeevan Bima’. Here, we highlight whether or not should you opt for this policy.

Take note

There are three important points to note before you go for Saral Jeevan Bima.

One, it is the most basic term plan which provides level term cover — the premium payment and the life cover you choose remain constant for the policy term.

On the other hand, most policies in the market offer different options for SA.

For instance, LIC’s Tech Term plan gives you the option to choose between a level SA and an increasing SA.

Two, this standard plan offers lump-sum pay-outs to the nominee only upon the death of the policyholder.

But most plans in the market offer staggered pay-out options with an increase in pay-out at a certain percentage every year.

Some policies offer return of premium paid if the policyholder survives maturity.

And lastly, most term plans in the market offer accidental death benefit, partial and permanent disability benefit, and terminal and critical illness riders, in addition to death benefit. Some policies have riders built into them. For instance, SBI Life’s eShield comes with terminal illness cover built into the policy, and offers accidental death and accidental total and permanent disability as riders.

In the case of a standard term plan, only two riders can be offered — accidental death benefit and permanent disability benefit. Even then, it is at the discretion of the insurers.

The ₹25-lakh cover may not be sufficient for everyone. When it comes to term plans, experts generally recommend having a term policy with a death benefit at least 10-20 times your gross yearly income.

You should also consider your personal financial position (your liabilities) to decide your SA, as it will help if your dependants can comfortably settle your outstanding liabilities, if any, in your absence.

While insurers have the option of offering higher SAs on this standard policy, we need to wait and watch as to how many will do so.

Otherwise, with Saral Jeevan Bima, since terms and conditions and pay-outs are the same across insurers, you can select the insurer based on the premium, services offered as well as their claim settlement track record.

To give you an idea, the premium for existing term plans for ₹25 lakh (30-year-old male for 70-year policy term) works out to ₹3,500-8,500 across insurers.

It would work to the benefit of the policyholders if this policy is available through digital platforms as online plans tend to be cheaper.

Currently, the minimum SA of many insurers are higher than that of Saral Jeevan Bima — ₹50 lakh for LIC’s online term plan Tech-Term, and ₹35 lakh for SBI Life’s eShield (if purshased online). If Saral Jeevan Bima is available online, it can come in handy for those looking for a cover for ₹5-25 lakh.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,