Irdai has come out with the guidelines for a standardized individual term insurance mandating all life insurance companies to offer these policies from 2021, as reported by The Economic Times.
The policy called ‘Saral Jeevan Bima’ has been designed by the Authority as a non-linked, non-par protection policy with stipulated pay out in the event of death of the sum-assured. Insurers have been mandated to file their products by December 2020 and then market them starting 2021.
The Insurance Regulatory and Development Authority said that the standardization of term policies was necessitated due to complex wordings on existing policies and the lack of awareness among a large section of population to make informed choices.
The insurance regulator also said that such a standardized product would also reduce mis-selling and potential disputes at the time of claim settlement. It was a long-standing objective of Irdai to offer a standard term life policy. According to industry executives, this will help in making term covers easier for less affluent sections of the society.
Irdai has recently introduced standardized health covers too. Experts say that the standardized term covers will also be similar in several aspects.