Saral Jeevan Bima for a 62-year-old grandmother: age, term and sum assured limits
Sunita, 62, a widow in Coimbatore, runs a small tailoring unit and receives ₹18,000 a month in rent. Her grandson, whom she is raising, starts an engineering course in three years, and she wants cover until he finishes - about ten to twelve years from now. She asks a POSP appointed by ABC Life for ₹50 lakh of 'simple term insurance, the standard one, no investment'. She is a non-smoker with controlled hypertension and holds no other policies. She wants the cover to run at least 12 years and asks whether she can pay the entire premium once, from a fixed deposit. The POSP markets the insurer's Saral Jeevan Bima and is unsure about the maximum sum assured, the age limits, the longest term she can obtain, and whether he should simply write ₹50 lakh in the proposal form to 'see what the underwriter clears'.
1. What are the Saral Jeevan Bima product limits relevant to Sunita, and what can the POSP actually place for her?
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Saral Jeevan Bima is the standard pure-term product that every life insurer must offer. Its framework limits are: entry age 18 to 65; maximum age at maturity 70; policy term 5 to 40 years; sum assured from ₹5 lakh to ₹25 lakh; single and regular premium options.
Apply them to Sunita:
- Age at maturity. She is 62, so she can enter, but the contract cannot run past age 70. The longest term available is 8 years, not the 12 she asked for. Her protection need outlives the product's limit.
- Sum assured. The maximum under this product is ₹25 lakh. The ₹50 lakh she has in mind cannot be placed here at all.
So the honest answer is: at most ₹25 lakh for at most 8 years, if she still wants it. Her hypertension must be disclosed and the insurer may call for medicals; the product must be offered by every insurer, but that is not a guarantee of acceptance. Writing ₹50 lakh 'to see what the underwriter clears' is wrong - the proposal must state the cover actually applied for, and the seller does not test limits through the underwriting queue.
2. Sunita proposes ₹25 lakh with ABC Life and ₹25 lakh with another insurer, and asks the POSP not to mention the second proposal anywhere. How should he respond?
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He must refuse, and explain why in plain terms.
The proposal form asks for all existing and proposed life insurance. That information is material: total cover across insurers affects the insurer's assessment of over-insurance, moral hazard and whether the policy is a genuine protection need or a wager on the life. Advising her to leave it out is abetment of misstatement, and it is precisely the conduct that later Section 45 investigations and repudiation findings are built on - if the suppression surfaces within three years of issuance, the insurer can question the policy in writing and refuse the claim.
He should also be clear about his own authority. His appointment is with ABC Life for the life line of business; he cannot place business with another insurer or act as a conduit for a second policy. If she wants cover elsewhere, she must approach that insurer's own agent, POSP or branch directly, and disclose the ABC Life policy there too.
His job is to state the limits honestly, record her decision, and let her make an informed choice with full disclosure - not to engineer the result.
3. She asks whether the money comes back if she survives the term. What must he explain about maturity, surrender, lapse and revival?
Read the worked answer
Pure term cover buys risk protection only, and the explanation should be direct.
- Maturity: if she survives the 8-year term, nothing is payable. There is no maturity benefit, no bonus, no fund.
- Surrender and paid-up value: because there is no savings element, the plan does not build a surrender value, and there is no paid-up value. If she stops paying, the policy lapses and the protection simply stops.
- Revival: the only route back is revival within the period stated in the policy (regulation requires at least five years for non-linked products, or the remaining term if shorter), on payment of arrears with interest and evidence of continued good health. At 62 with hypertension, revival is not automatic.
- Death benefit: the sum assured is payable on death during the term, subject to the terms, the 12-month suicide exclusion and any outstanding policy loan.
She should compare this with the fixed deposit she is using: the term plan gives large cover for a small outlay but returns nothing; the deposit returns money but gives no cover. Stated plainly, that is the advice she needs.