Saral Jeevan Bima Yojna Insurance
If the breadwinner of a family dies prematurely, the family suffers both an emotional loss and a financial one. While it is impossible to compensate for the emotional loss, the financial loss can be recovered. This is where life insurance plans come into the picture. These policies cover the risk of premature death and compensate for the financial loss suffered if the insured dies.
While there are different types of life insurance plans, a term life insurance policy is the most basic coverage that covers the risk of dying too early. It is also the most important coverage. Hence, the Insurance Regulatory and Development Authority of India (IRDAI) introduced the concept of a standardized term insurance plan called the Saral Jeevan Bima policy.
Highlights of Saral Jeevan Bima Yojna Insurance
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Saral Jeevan Bima Yojna Insurance Everything You Want to Know
Benefits of Saral Jeevan Bima insurance
The best benefit of a standardized insurance policy is that it allows a majority of India’s population who are uninsured to come under the umbrella of insurance. Either due to a lack of awareness or to avoid high premium payments, many people in India do not invest in life insurance plans. A standardized policy, thus, can provide the basic coverage benefits to individuals and give them much-needed insurance coverage.
Another benefit of having a standardized insurance plan is that it allows consumers to buy an insurance policy at affordable rates. You can calculate the premium easily using our Premium Calculator.
Standardized insurance plans are also easy to compare. Since the coverage benefits are the same, consumers can compare insurers based on the premium charged and choose a plan that has the lowest premium rate.
Tax benefits of Saral Jeevan Bima
Being a life insurance policy, Saral Jeevan Bima offers the following tax benefits to policyholders:
The premium that you pay for the Saral Jeevan Bima policy is allowed as a deduction from your taxable income. You can claim a deduction on the total premium up to a limit of Rs.1.5 lakhs. However, the premium should not be more than 10% of the sum assured. If the premium exceeds 10% of the sum assured, a deduction would be allowed only on the amount that is equal to 10% of the sum assured.
The death benefit paid by Saral Jeevan Bima is always tax-free in the hands of your beneficiary.
If the insurer offers optional riders and the rider offers health insurance coverage, you can claim a deduction on the premium amount up to a limit of Rs.25,000. This deduction is available under Section 80D of the Income Tax Act, 1961 and it increases to Rs.50,000 if you are a senior citizen
Key Features of the Saral Jeevan Bima Yojana
The Saral Jeevan Bima policy has an initial waiting period of only 45 days. If the insured dies within this waiting period due to an illness or any other form of natural death, 100% of the premium paid till death is refunded. However, for accidental deaths, there is no waiting period. If the insured dies due to an accident during the waiting period, the full death benefit is paid. After the waiting period is over, the plan covers you fully. You get the full death benefit whether the death is due to an accident or otherwise.
If the insured dies within the policy tenure, the death benefit is paid in a lump sum to the family members. This lump sum benefit provides financial assistance to the bereaved family on the loss of the insured member.
Saral Bima Yojana offers you the flexibility to pay the premium at your convenience. The plan offers single premium payment, limited premium payment, and regular premium payment modes. You can, thus, pay the premium once, for a limited period, or throughout the policy tenure as per your affordability. Moreover, you can also choose the premium payment frequency from the monthly, quarterly, half-yearly, or annual mode.
Premiums are lower for longer policy tenures. So, depending on the coverage tenure selected, the premium would be calculated
Many insurance companies allow you the choice of increasing the scope of coverage of the policy through riders. Riders are optional coverage benefits and the riders offered depend on the insurer. You can, thus, compare and choose an insurer that offers suitable riders to make the policy more comprehensive.
How does Saral Jeevan Bima work?
Under a Saral Jeevan Bima plan, you will have to choose the following details when you buy the policy:
- The sum assured in the plan
- The tenure of the policy
- Premium paying frequency i.e half-yearly, yearly, monthly, or quarterly
- Premium paying tenure
The premium will be calculated based on the policy details, your medical history, and your age. The premiums for the plan are to be paid for the selected premium-paying tenure.
Now, if the insured dies during the term of the policy, once the waiting period has lapsed, the sum assured would be paid as the death benefit. Here’s a quick example to understand how the plan works -
Example:
Mr. Agarwal buys a Saral Jeevan Bima Yojana policy with a sum assured of Rs.15 lakhs. The policy term is 15 years and the premium is also paid for 15 years, annually. Suppose the premium amounts to Rs.7500. There is a waiting period of 45 days in the plan from the date of commencement of risk.
Case 1
Mr. Agarwal dies within 45 days from the date of risk commencement due to an accident
Accidents are covered from the first day of the plan. As such, in this case, the basic sum assured would be paid. The death benefit would be the highest of the following –
- The sum assured of INR 15 lakh
- 10 times the annualized premium, i.e. Rs.7.5 lakhs
- 105% of the premiums paid till the date of death, i.e. 105% of Rs.7500 * 105% = Rs.7875
Since the sum assured is higher, Mr. Agarwal’s family would receive Rs.15 lakh on Mr. Agarwal’s demise.
Case 2
Mr. Agarwal dies within 45 days from the date of risk commencement due to an illness
The policy covers death only due to an accident during the waiting period of 45 days from the date of the commencement of the risk. Hence, in this case, the basic sum assured in the plan cannot be paid. Instead, the premium would be refunded and Mr. Agarwal’s family would receive Rs.5000 as the death benefit.
Case 3
Mr. Agarwal dies in the 10th policy year
In this case, the nominee will receive the sum assured on death which is higher of the following –
- 10 times of annualized premium, i.e. Rs.7.5 lakhs
- Basic sum assured of Rs.15 lakhs
- 105% of the premiums paid till death, i.e. 7.5 lakhs * 10 * 105% = Rs.787,500
Hence, Mr. Agarwal’s family would receive Rs.15 lakhs as the death benefit.
Case 4
Mr. Agarwal survives the policy term of 15 years
Saral Jeevan Bima is a pure-term insurance plan. No maturity benefit would be payable if the life assured survives the stipulated date of maturity. Hence, nothing would be payable to Mr. Agarwal after the expiry of the policy term.
Saral Jeevan Bima Yojna Insurance Plan - Inclusions and Exclusion
Saral Jeevan Bima Yojna Insurance Plan - Inclusions
Saral Jeevan Bima covers death that can occur due to accidents, illnesses, or injuries. In the case of death, the highest of the following amounts would be paid –
10 times the annual premium
105% of the aggregate premiums that you have paid till death
Absolute assured benefit which is equal to the sum assured chosen
However, in the case of death during the waiting period for any reason other than accidents, 100% of the premium is paid back.
Saral Jeevan Bima Yojna Insurance Plan – Exclusions
Saral Jeevan Bima's policy provides coverage against all types of deaths but does not cover the following instances-
Suicides within a year - The policy will be considered void if the life insured commits suicide within 12 months from the commencement of the policy. Death due to committing suicide within a year of buying the policy will not be covered. However, 80% of the premiums paid for the plan till the date of death will be refunded. In the case of single premiums, the refund would be 90% of the premium.
Similarly, if the life insured commits suicide within one year of the revival of a lapsed policy, no death benefit would be paid and in such cases 80% of the premiums paid for the plan till the date of death would be returned. For single premium plans, 90% of the premium would be refunded.
Hazardous acts -If the life insured suffers death due to participation in hazardous activities or any other adventurous sport, such instances of death would not be covered by the insurance company.
Substance abuse - Death of life insured due to intoxication, alcohol, drugs, or abuse of banned substances would also be excluded from coverage.
Criminal acts - Death at the time of committing a criminal act would also not be covered
Breach of good faith - In case you provide any misinformation to the insurance company or hide important information that eventually affects your death risk, then the insurance company reserves the right to reject the death claim if it finds out about such misrepresentation or non-disclosure of significant information
Lapse - No claims will be entertained by the insurance company if the death occurs during the period when the policy has lapsed and is pending revival
Fraud claims - No fraudulent claims would be entertained by the insurance company under the plan
Factors Affecting the Saral Jeevan Bima Yojna Insurance Premium
Your age determines your mortality risk which increases with age. As such, the older you are the higher the premium, and vice-versa
Your age determines your mortality risk which increases with age. As such, the older you are the higher the premium, and vice-versa
The higher the sum assured that you choose the higher the premium and vice-versa
Premiums are lower for longer policy tenures. So, depending on the coverage tenure selected, the premium would be calculated
Premium payment terms also affect the premium amount. Single premium is the highest followed by limited premiums. Under regular premium policies, the premium is the lowest. Moreover, if you pay premiums half-yearly, quarterly, or monthly, insurers might charge a bit higher amount of premium for the additional cost of servicing such frequencies
If the plan offers optional riders and you choose one or more riders, an additional premium would have to be paid. This is because each rider comes with an added premium and if you add the riders to your policy, the premium increases
If the insurer is offering premium discounts and you are eligible for the same, the premium would reduce
If you have an existing or previous medical complication, the death risk increases. As such, the premiums are also increased
If you have hereditary illnesses or if there is a family history of medical complications, the premium would be higher
Females are considered to have a lower mortality risk than males. As such, they are charged lower premiums
If you are employed in a risky job, your premiums would be increased. That is why pilots, air hostesses, miners, police personnel, etc. with risky jobs have to pay higher premiums
If you smoke, your premiums would be higher since smoking increases the mortality risk
Saral Jeevan Bima Yojna Insurance Claim Procedures
Under Saral Jeevan Bima, a claim occurs on the death of the life assured during the tenure of the policy. If any life insurance company offers riders along with the Saral Jeevan Bima plan, then there might be rider claims too if you have opted for the available rider. Let us see the process to get death claim settlement
Documents for Claiming Saral Jeevan Bima Yojna Insurance
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Saral Jeevan Bima does not offer any maturity benefit. If the insured survives till the policy tenure and the policy matures, no benefit would be payable.
