Insurance aggregator Policybazaar.com anticipates an increase in the offtake of standard life insurance policies despite the higher premium compared with a term policy of similar sum insured.

The life insurance companies were mandated by insurance regulator IRDAI to offer standard term insurance policy — Saral Jeevan Bima — from January 2021.

The SJB policy, available to all individuals in the age group of 18-65 years, offers a sum insured ranging from Rs 5 lakh to Rs 25 lakh. There is no maturity benefit and only exclusion clause is suicide. The insurers will also not be liable for a payout if the policyholder dies within 45 days of taking the policy except for death in the case of an accident.

“Earlier, self-employed people with an annual income of Rs 3-5 lakh were not able to get term insurance because of the unavailability of income proof. Now, with the launch of SJB plans, this segment is more likely to get term insurance. SJB provides the option of income surrogate where you can submit the registration certificate of your car or two-wheeler as a surrogate to your income proof,” said Santosh Agarwal, chief business office-life insurance, Policybazaar.com.

“We expect the issuance rate to this segment to go up to 70 per cent which was earlier only 30 per cent. So far, we’ve seen traction around the self-employed people choosing SJB,” said Agarwal.

A key concern in the industry was the pricing of the SJB policies which were expected to be higher than a standard term cover for a similar sum assured. Insurers use demography, income category, place of residence, occupation and the education level of the buyers to create and price term products. A 40-year-old person opting for a sum assured of Rs 25 lakh may find that his monthly SJB premia works out to over Rs 1,000 plus whereas he may find options at around Rs 750 for a term cover of a similar sum assured.

“In SJB, no filters are allowed. So, the premium is on the higher side due to relaxation in underwriting norms. These plans are filling a need gap as a large chunk of low-income earners are unable to buy term plans. People who were not eligible to buy regular term products due to lack of income proof and required educational qualification can now avail a term insurance plan,” Agarwal said.