Wait to buy standard insurance plan gets longer

You may have to wait a bit longer to buy a standard term insurance plan, the Saral Jeevan Bima, which was slated to be launched on 1 January by life insurance companies, as the products filed with the Insurance Regulatory and Development Authority of India (Irdai) are still under review. A term plan pays out the sum assured to nominees in case of the insured’s death.

To help customers select the right term product, Irdai in October had mandated all life insurers to launch the Saral Jeevan Bima plans with simple features and standard terms and conditions. “The aim is to simplify the product and eliminate confusion in customers’ minds which arises from the different features attached to a term plan and the varying prices on account of these features," said Karthik Raman, chief marketing officer and head, products, IDBI Federal Life Insurance Co Ltd.

Irdai mandated the minimum sum assured at ₹5 lakh, which could be extended up to ₹25 lakh in multiples of ₹50,000. Insurers were also allowed to attach accident and permanent disability benefits as riders with the base plan. According to industry experts, individuals who are non-graduates or have low financial profile usually find it difficult to buy existing term plans, while Saral Jeevan Bima were to be offered without restrictions on gender, place of residence, travel, occupation or educational qualifications.

However, none of the life insurance companies have launched the plan yet. Some insurers Mint spoke with expect the approvals to come later this month, while some others expected to launch the products in the first week of February.

“Our product is under review by the regulator and we will assess the launch date upon approval of the product by the authority. As the product reviews by the regulator undergo detailed assessments, the entire approval process can take time to conclude," said Aalok Bhan, director and chief marketing officer, Max Life Insurance Co. Ltd.

IDBI Federal Life Insurance Co. Ltd is looking to launch the plan at the end of January or early February, which will be subject to regulatory approvals. Besides, IndiaFirst Life Insurance Co. Ltd and Kotak Mahindra Life Insurance Co. Ltd are yet to receive approvals to launch the product. Most life insurance companies refused to comment as the products are still under review by the Irdai.

According to industry experts, there are two areas where insurers are still in discussions with the Irdai. “One is flexibility in terms of the maximum sum assured and the other is pricing. These are the two areas where certain approvals are still pending," said Mahavir Chopra, founder, Beshak.org, a research platform for insurance users. An email sent to Irdai seeking its response remained unanswered till the time of filing this story.

Source: Live Mint

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