Saral Jeevan Bima Yojana from IRDAI - Everything You Should Know

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.

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)

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

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.