One Size Doesn't Fit All

The new standard term insurance plan is easy to understand, and perfect for first-time buyers and low-income individuals. But the sum assured is low, and it is a pure-risk plan

- Nirmala Konjengbam

It is hard to miss the catchy TV commercial where actor Akshay Kumar dons the avatar of Yamraj 2.0. His message: why you should protect your family through insurance against uncertainties. While its humorous quotient cannot be ignored, the need to secure the future of the loved ones, with₹1 crore sum assured by spending a meagre₹680 per month, does leave an imprint on the viewer’s mind.

The ad promotes a standard term insurance plan, where a predetermined death benefit is provided to the policyholder’s family if the untoward happens. “The plan is a boon for first-time buyers who do not have knowledge of the product. It primarily caters to consumers falling under the lower-income group and for those who do not have uniform income proof. It is standard across insurers, and is easy to understand,” says Santosh Agarwal, Chief Business Officer, (Life Insurance), Policybazaar.com

Adding few riders for a comprehensive cover can take the monthly cost close to₹2000. While it appears to be a beneficial offer, in a country where per-capita monthly income stands at₹11,254,₹2000, or even₹680, can be a big thing. Hence, it is not surprising that insurance penetration stood at 3.7 per cent in 2018, as per the Insurance Regulatory and Development Authority of India (IRDAI).