IRDAI-mandated Saral Jeevan Bima versus other term insurance plans: How they differ

Are you zeroing in on a term insurance plan to financially protect your loved ones in your absence but struggling to make a decision? If so, you should know about Saral Jeevan Bima, a simple and standardised pure term plan, offered by all life insurers as mandated by the Insurance Regulatory and Development Authority of India (IRDAI). The regulator mandated this standard product to bring uniformity in policy terms and coverage across insurers, making it easy for first-time life insurance buyers to understand and compare different offerings.

In this article, we will take you through the key features of Saral Jeevan Bima and explain how it compares with other regular term insurance plans.

Saral Jeevan Bima is a non-linked, non-participating pure standardised term insurance policy for individuals.

Entry age: Entry age to be eligible for the product is 18-65 years

Maximum age upon maturity: 70 years

Policy term: The term as stipulated by the IRDAI can be between 5-40 years

Income eligibility: To be eligible for this cover, you need to have a minimum income of ₹2.5 lakhs.

Sum assured: Policyholders can secure these policies with a minimum cover of ₹5 lakh and the maximum could be up to ₹25 lakh.

Premium payment option: The pay-out towards the policy can be either as regular premium, single premium or limited premium.

Waiting period: Except in the event of death due to accident, 45 days waiting period applies i.e. claims are processed against the plan after 45 days of the commencement of risk.

Death benefit: Sum assured is paid to the nominee in case the policyholder or life assured dies during the policy term

Maturity benefit: The plan being a pure term plan entails no maturity benefit.

Exclusions: Other than the suicide exclusion, this term cover comes with no other exclusion.

Riders available: With the standardised Saral Jeevan Bima, only specified riders including, accidental death benefit, accidental total and permanent disability rider can be availed.

Pricing: Pricing across insurers varies as IRDAI has allowed insurers to price the product based on their actuarial and other specifications.

“IRDAI-mandated Saral Jeevan Bima is a standard term insurance plan that offers uniform features, fixed policy wording and basic eligibility criteria across all insurers making it easier to compare and understand. Other term insurance policies are tailor made products providing higher coverage, adjustable policy terms, optional riders, better premium options and other benefits such as increasing cover or return of premium,” said Kirang Gandhi, Director at KAARMIKA Wealth Mentors.

Saral Jeevan Bima plan not cheaper

While we may assume that Saral Jeevan Bima plan being a IRDAI-mandated policy may be priced lower, it isn’t the case. An individual male aged 18 years in the income bracket ₹2.5 lakh -5 lakh buying this plan with a maximum life cover of ₹25 lakh from SBI Life for a tenure of 40 years will have to pay a premium of ₹7,900 in the yearly mode. Here the premium payment term is taken as 40 years.

On the other hand, LIC’s term plan New Jeevan Amar with a similar coverage can be bought at an yearly premium of ₹4,575.

(Note: Premium calculation is done from respective insurer’s platform)

In conclusion, while Saral Jeevan Bima could serve people looking for basic life cover, customised term plans are often better for long-term financial planning and complete safety of the family.