Life insurance companies are preparing to launch Saral- a standard term policy that has been designed by the Insurance Regulatory and Development Authority of India (IRDAI) from January 1, 2021. The move was expected to trigger a price war among the insurers and buyers are likely to get a bargain deal.
After the outbreak of the COVID-19 pandemic, demand for term cover has increased because people have understood the importance of term insurance. Despite insurers have been the worried about selling lower value term covers, the increase in demand for term cover during the pandemic has shifted focus to protection. These are the key things to know about the Saral Jeevan Bima that is expected to hit the market from January 1st 2021.
The Saral Jeevan Bima should start selling from January 1, 2021, as directed to all life insurers by Insurance Regulatory and Development Authority of India (IRDAI). The policy assures a standard wording for sum insured so that it will be effortless for buyers and they don’t need to review the fine print of the policy. The distributors will not be having much difficulty in explaining the product to their customers because of the standard features. Also, the regulator does not have to inquire about the plans of each company before sanction.
The nation’s middle class is the main target customer of this policy, which is not sufficiently covered now. The amount assured of Saral Jeevan Bima will range from Rs 5 lakh to Rs 25 lakh. There are around six crore people filing income tax returns right now, but only sixty lakh hold term insurance policies which includes an insurance penetration of 10%.
The government schemes like PM Jeevan Jyoti Bima Yojana is protecting in a very low end. The Indian middle class is expected to get a good deal on term insurance up to Rs 25 lakh with the launch of Saral Jeevan Bima. The insurers have been competing for the high end of the term market with a sum insured over Rs. 25 lakh as the mortality experience in that demography is better and companies can get reinsurance protection.