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Term life insurance is one of the primary financial products you should buy the moment you start earning. However, if you are looking for the perfect solution for your needs, you may feel overwhelmed by the choices.
At present, 24 life insurance companies are providing life insurance products in India. If you merely search for the words ‘term insurance’, you have more than 24 places you can buy the policy from and more than 50 options to choose from.
The fact is that not everyone has the time or interest in becoming a term life insurance expert to secure their family financially. IRDA aims to simplify this quest for everyone with the Saral Jeevan Term Insurance plan.
Key Takeaways
Term insurance is essential once you start earning or have dependents.
Saral Jeevan is mandatory across all Indian insurers with uniform benefits and pricing.
The plan has simple documentation and minimal underwriting requirements.
Limitations include a sum assured cap of ₹25 lakhs and no loan facility.
What is the Saral Jeevan Plan from IRDA?
Saral Jeevan is a term life insurance plan which has been standardised for the market. That means you will be able to buy this term insurance plan from any life insurer in the country without variations in price, features and benefits.
Starting 1st January 2021, every life insurance provider in the country will need to offer this product compulsorily. So, if you want to buy a term insurance cover to protect your family from the financial effects of your untimely demise, you can simply opt for Saral Jeevan.
Features & Benefits of Saral Jeevan Term Plan
Saral Jeevan term plan is, as easy as its name suggests, to understand. The features are straightforward:
Open to all individuals irrespective of gender, education, occupation, residential area or the presence of income proof
Easily buy a plan through telemedical, physical medical or even lack of medical subject to the policies' terms and conditions
Term coverage goes up to 70 years of age
The age limit range to buy the plan is 18 to 65 years
The policy term range is from 5 years to 40 years
Sum Assured is payable on the death of the life assured
You will need to pay premiums to secure the cover
You can choose to pay the premiums in:
Regular mode: Every year throughout the policy period or the claim incident
Limited pay mode: pay annually for only a few years, which is less than the policy period
Single pay: Pay the premium for the entire tenure in a single instalment
The policy has the option where you can choose accidental death and disability riders. You should note that the disability rider is limited only to total permanent disability.
The policy also covers accidental death within the waiting period of 45 days, even when you have not opted for the accidental death rider. The beneficiary or nominee here receives the final amount on demise as a lump sum. The specific amount provided is as follows:
Limited and regular premium: The higher of the assured sum amount, ten times the annualised premium, 105 per cent of the total paid premiums till the death date, or the already decided assured amount for payment to be beneficiary/nominee on demise.
Single premium: The higher of 12 per cent of the single premium or the absolute assured amount.
Death due to a reason other than accident: If this happens during waiting time, the beneficiary/nominee gets the death benefit that is equivalent to 100 per cent of the total paid premiums, excluding taxes.
Tax benefits on premiums under Section 80C, while benefit on received amount under Section 10(10D)
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No Exclusions
The primary benefit of the Saral Jeevan plan is that you can buy this term cover from any life insurer without worrying about the exclusions. A suicide clause is the only exclusion in this plan, which also expires after 12 months, as with every other term insurance plan.
It meansthat for a single premium plan, 90 per cent of the total premium amount submitted till the death date will be paid if the policyholder commits suicide within 12 months from the beginning of the policy. For a regular or limited premium plan, 80 per cent of the submitted premium till death will be provided to the nominee.
Therefore, while buying this term cover, you can be absolutely certain about the benefits and features you are getting. Since this term covers are standard across the industry, there is no need to spend time on the comparison, as there will be no differences.
Documentation for Saral Jeevan Plan
The following types of documents are required for purchasing the plan:
Date of Birth proof: PAN, Aadhar, Election ID, passport or school transfer certificate
Identity proof: Passport, PAN, Aadhar, driving license or Election ID
Address proof: Driving license, landline and electricity bill, lease agreement, passport, bank statement for the last three months, Aadhar card, ex-servicemen card
Salaried individuals: Bank statement and salary slip for the last three months, and Form 16
Self-employed individuals: 2 years of computation of interest, ITR and Form 26AS
Did You Know?
The origins of modern insurance can be found in the London Fire of 1666. Due to the severity of the fires, insurance became essential rather than optional.
Source: Investopedia
Limitations of the Saral Jeevan Plan
With simplicity comes limitations as well. Few features may also mean a lack of many features. However, in the sense of a pure term plan, Saral Jeevan does not lack much. Here are a few important limitations you may want to consider before you buy:
Minimum sum assured is ₹ 5 lakhs and maximum sum assured is ₹ 25 lakhs
A waiting period of 45 days
No loan facility under the plan
The base plan offers a maximum term cover of ₹ 25 lakhs only. However, insurers are free to offer a higher sum assured, which means if you want a higher sum assured, you may need to research a little.
Within the 45-day waiting period, the sum assured is not payable, except in the case of accidental death. In case of a death claim (other than accidental death) within the waiting period, all the premiums paid for the plan are refunded, except the tax deductions.
Terms and Conditions of Saral Jeevan Plan
Some of the terms and conditions to be well aware of while making the changes are:
Revival of a lapsed plan must be done within 5 years from the date of the first unpaid premium and before the maturity date
A free look period of 15 days and 30 days for offline and online purchase of the policy is available
Grace period of 15 days for monthly premiums and 30 days for policies with half-yearly or yearly terms for payment of every renewal premium amount
When Should You Buy Saral Jeevan Term Plan?
Saral Jeevan is a pure term insurance plan, with no difference in features, wherever you decide to buy it from. So, if you are a first-time term insurance buyer and do not have time to spend exploring the term insurance world, this plan is perfect for you.
Also, you should understand that you need a term insurance cover as soon as you have achieved any of the following milestones:
Started earning
Have acquired a family or dependents
Feel the term plans are challenging to interpret
In the meantime, if you are procrastinating on researching for a suitable term insurance plan
Saral Jeevan term plan has minimal underwriting needs due to its straightforward features. Thus, you can ensure a financial safety cover for your family quickly with the Saral Jeevan plan.
Conclusion
Saral Jeevan Bima Yojana is a simplified term plan ideal for first-time buyers. With uniform features, and minimal documentation, it ensures essential financial protection. While the ₹25 lakh cap is a limitation, it remains a reliable choice for basic life cover across all insurers.
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Sum Insured: Sum insured is the maximum cap on the costs you are covered for in a year against any unfortunate event. It is applicable to non-life insurance policies like home and health insurance.
Sum Assured: Sum assured is the amount the life insurance company pays to the nominee if the insured event happens (death of insured). This term is used in life insurance policies.
Maturity Value: The amount of money paid out when a life insurance policy matures is known as its maturity value.
Risk Transfer: Risk transfer is a strategic method where a pure risk can be contractually shifted from one party to another as part of risk management and control.
Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.
