Standardized Term Insurance Policy Explained
Are you looking to purchase a term plan? How is it different from the standardized term insurance policy? Well, you are at the right place, as today we shall explore an insurance policy that the Insurance Regulatory and Development Authority (IRDAI) came up with. Though term plans are the simplest form of insurance in the market, sometimes the jargons may seem complex. So, keep reading to learn more about standardized term insurance and its working.
What Is Standardised Term Insurance Policy?
The standardised term insurance policy, or popularly known as the Saral Jeevan Bima Yojana, is a pure risk cover initiated by IRDAI. When you consider purchasing a term insurance plan, you shall come across an endless number of options. Sometimes too many choices with varied features can be confusing. But the Saral Jeevan Bima Yojana aims to provide individuals with a simple risk cover, having the standard policy wordings and features. Therefore, as a first-time buyer, you can be worry-free about insurance jargons as the standardised term insurance policy is the same across most leading insurance companies.
How Does Standardised Term Insurance Policy Work?
Similar to the working of a term plan, the Saral Jeevan Bima Yojana offers a life cover to the policyholder. In case something happens to the insured, a lump sum benefit shall be paid out to the policyholder’s beneficiary. But unlike some term policies, you can avail higher tenure with the standardised term insurance policy up to a term of 40 years. Not only can you enjoy a maximum age of policy maturity but also multiple term insurance premium payment frequencies. As the Saral Jeevan Bima Yojana is a pure risk cover, there will be no maturity benefit or loan against the policy options available.
Benefits under Standardised Term Insurance Policy
Go through some key perks of opting for Saral Jeevan Bima Yojana and how it can benefit your dependents:
- Flexible sum assured options
The minimum sum assured for Saral Jeevan Bima Yojana starts at INR 5 Lakh with a maximum option of INR 25 Lakh. But insurance companies can also offer a coverage amount beyond INR 25 Lakh as well. Thus, the plan enables you to choose the sum assured based on your insurance requirements without any hassles.
- Multiple premium paying frequencies
With the standardised term insurance policy, you can pick the payment frequency as per your financial condition. The available options are regular, limited (payment term of 5 or 10 years) and single premium payment frequency. You can estimate your premiums with the help of a term plan premium calculator for better planning.
- Varied policy terms
As mentioned before, you can opt for a high policy tenure of 40 years to safeguard your dependents for the long term. However, the term insurance plan has a minimum policy tenure of 5 years. So, you can estimate the period for which you require insurance and select the term accordingly.
- Tax benefits
Under Section 80C of the Income Tax Act, you can claim the premiums paid towards Saral Jeevan Bima Yojana as a deduction. The maximum limit per financial year is up to INR 1.5 Lakh. In the event of demise, the death benefit can be claimed under Section 10(10D) of the Income Tax Act as tax-free. Hence, you can easily save up on taxes while investing in a life cover.
With this, you have now gone through what is term insurance, what Saral Jeevan Bima and some of its features and benefits are. Such a policy is available with most insurance providers, so you can protect your loved ones starting today. However, it is recommended to go through your policy documents carefully and understand the exclusions that aren’t covered under the plan.