Updated: June 8, 2021 12:02:39 pm
Written by Sajja Praveen Chowdary
With a rapid increase in the number of COVID-19 positive cases and over 4,000 deaths being reported each day, Indians are buying term life insurance plans in elevated numbers. Term life insurance is the purest form of life insurance that offers comprehensive financial protection to the dependents against life’s uncertainties – one such being death due to COVID-19 related complications.
It provides a huge cover amount for a very small premium and your family will get the life cover in case of your untimely demise within the policy period. Interestingly, in the last few months, a new category of individuals have been added amongst those buying term life insurance for the financial protection of family members – individuals falling under the lower-income group/economically weaker section.
One such example is of Dinesh Biswas, a 35-year old shopkeeper from Uttar Pradesh’s Azamgarh district. In the last two years, Dinesh tried at least thrice to secure a term life insurance for himself as he learned how effective and efficient the plan can be to secure the financial future of his family members in case of his untimely demise. Unfortunately, Dinesh was denied coverage every time due to lack of regular income proofs and his academic qualification – Dinesh was just 10th pass. However, two months back, he finally succeeded in buying a term life insurance plan for himself – all thanks to Saral Jeevan Bima.
Recently introduced – Saral Jeevan Bima is a regulator-mandated standard term life insurance plan offering basic protection to people who are self-employed or belong to a lower income category – earning about 5 lakhs a year. With standard terms & conditions, features and benefits, the plan aims to bridge the protection gap between India and Bharat.
Over the last few months, Saral Jeevan Bima has been successful in providing a minimum coverage to many others like Dinesh who were earlier unable to buy a term life insurance plan due to lack of enough financial income, education. The insurers offering this plan have adopted better and smarter ways of analysing irregular income streams through surrogates such as ownership of various other assets, ascertaining income basis other financial instruments that a customer has currently.
Saral Jeevan Bima is a plain vanilla term cover that pays the entire cover amount to the dependents in case of the death of the policyholder within the policy term. The plan is available for a minimum cover amount of Rs 50,000, up to a maximum of Rs 25 Lakh.
Even the numbers around the popularity of Saral Jeevan Bima narrate some interesting trends. The average income bracket of customers investing in Saral Jeevan Bima is between Rs 3 –3.5 Lakhs. Further, the demand for standard term life insurance plan is maximum amongst the middle-aged group people as the maximum customers – almost 50 per cent – buying Saral Jeevan Bima are between the age group of 31 to 40 followed by 25 to 30 – 22 per cent and 41 to 50 – 18 per cent.
The numbers depict that individuals with financial dependents are the ones buying term life insurance maximum in Saral Jeevan Bima segment as well. Usually, people in their early 30s and late 40s have important expenses to take care of including kid’s education and marriage, repay loans, if any, and plan for a safe retirement.
Trends around gender-wise participation of customers in buying Saral Jeevan Bima showcase that while 80 per cent of the male population is buying term life cover, only 20 per cent of the female population thinks it is equally important to protect their lives with an adequate term life insurance plan. The immensely high discrepancy in participation of men and women in buying term plans is also due to the lack of employment of women in the lower-income category and limited knowledge around the importance of term life insurance in financially securing the future of dependents.
The insurers and the insurance regulator – IRDAI are together taking the best possible initiatives to bring maximum people under the insurance umbrella. For Saral Jeevan Bima, in particular, insurers have devised new ways to fetch income proofs to make the process simpler for prospective first-time buyers. This practice has brought the term life insurance policy issuance rate for the lower-income segment to 70 per cent now from 30 per cent earlier.
For customers yet to buy Saral Jeevan Bima or planning to buy one anytime soon, there are some important aspects to keep in mind for making an informed decision. The first and foremost thing to remember is to compare different plans and check for their eligibility within the guidelines provided by the Insurers. Second, while the features and benefits of the Saral Jeevan Bima plan are similar across insurers, customers must also compare the claim settlement ratio of the insurers. Once these two reference points are checked, the customers can choose the Insurer that they feel best out of those that he/she is eligible to get a plan from.
The author is Head-Term Life Insurance at Policybazaar.com. Views expressed are that of the author.
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