The long-lasting COVID-19 pandemic, which began last year in India and is still ongoing, has taught us all some of the most crucial financial lessons, with financial security being the most important learning. Over the past 15 months, the demand for insurance products has multiplied by several as people of all age groups scramble to buy the right insurance products – mainly health and life insurance – for a financial protection against unforeseen circumstances.
Most insurers also reported significant year-over-year growth in the claims and protection segment. In fact, with the introduction of standardized health and term insurance plans, the country’s insurance penetration rate has received a much needed boost. In accordance with the guidelines of the Insurance Regulatory and Development Authority of India (IRDAI), insurers have launched the Standard Term Life Insurance Scheme – Saral Jeevan Bima and the Standard Health Insurance Scheme – Arogya Sanjeevani. With the introduction of standard insurance products in the market, a new category of customers emerges where protective coverage is for everyone. The main boost comes from the low income group, which has become a new category.
What the trends say
Speaking of Saral Jeevan Bima, the plan has made it easier and more convenient for people with relatively less education and those falling under a low income profile to get coverage as part of a plan. pure protection. This standard term life insurance plan has a much higher issuance rate for low income segment groups or people with limited education compared to regular term life insurance plans.
For those unfamiliar with term insurance plans, a term plan covers your life for a significant amount of coverage with a very small premium that you pay (for example, a 25-year-old can get life coverage for Rs 1. crore for 25 years at a premium of around Rs 500 per month). According to the available trends, Saral Jeevan Bima enjoys maximum popularity among people who do not have regular proof of income and the self-employed.
The average income of people opting for Saral Jeevan Bima is Rs 3 to Rs 3.5 lakh and over 70% of the plans are purchased by people under 31 to 50 years old. This is mainly due to the fact that people in their early 30s and late 40s typically have some of the large expenses to cover, including paying for education and child marriage and paying off loans such as home loans. and automobiles while simultaneously planning a safe and secure retirement. In addition, the share of female buyers for Saral Jeevan Bina is also very high compared to regular term insurance plans.
Since the features, as well as the terms and conditions of Saral Jeevan Bima, are the same from one insurer to another, the main differentiators are pricing and eligibility. When purchasing the plan, customers should compare the premium and consider the insurers’ claims settlement ratio. In the insurance industry, the claims settlement ratio is defined as the percentage of claims paid by an insurer out of the total number of claims received.
For example, if an insurer’s claims settlement rate is 98%, that means the insurer has paid 98 death claims out of 100 claims received. The other important factor to consider is eligibility. Each insurer differs in terms of required documents, education and income, etc. It is important to compare and understand which plan the client will be eligible for in order to avoid rejection after the whole process.
The introduction of Saral Jeevan Bima is considered to be a revolutionary initiative in the life insurance industry, as it will attract as many people as possible under the insurance umbrella and mainly those belonging to a low income group. The minimum and maximum entry age for the Saral Jeevan Bima plan is 18 and 65, respectively, with a policy term of between 5 and 40 years. The maximum age up to which a person can be covered is 70 years. As for the amount of life coverage, the minimum amount of coverage that clients can opt for the Saral Jeevan Bima policy is a minimum of Rs 5 lakh while the maximum amount of coverage currently available from most insurers is Rs 25 lakh.
(By Sajja Praveen Chowdary, Head-Term Life Insurance, Policybazaar.com)