How Bima-ASBA Simplifies First-Time Insurance Payments
Bima-ASBA will simplify your first-time payment for insurance premiums by allowing you to block funds in your bank account using UPI-OTM. The money will be debited to your insurer's account only after the approval of the policy proposal, thus, ensuring smoother transactions and giving you facility for your first premium payment.
When you apply for an insurance policy, you can choose to avail Bima-ASBA facility. Upon receiving this request, the insurance company will send a request to your bank to block the required funds through its partner bank. Now, this payment mechanism asks for your consent before blocking the funds. The bank will proceed to block the premium amount only after receiving your explicit consent. Upon approval of the application, the insurer will inform both you and your bank to debit the funds, and the bank will seek your permission before transferring funds. This gives you status of your policy and gives you more security of your funds.
This way, Bima-ASBA ensures communication and transparency in the payment process.
The blocked amount will be held in your account during the waiting period (i.14 days) or till such time the underwriting decision is made, whichever is earlier. If you wish to cancel the policy proposal, please notify the Insurer by making a request through the various modes provided for this purpose . The Insurer will release the blocked amount within one working day of receiving the request. If the insurer fails to process your application within 14 days, the funds will be automatically unblocked by the partner bank.
Step-by-Step Guide for First-Time Users
According to the Insurance Regulatory and Development Authority of India or IRDAI, the Bima-ASBA facility is currently offered for life insurance and health insurance policies, and you can block up to Rs.2 lakhs [1] for premium payments in your account. The following steps show how Bima-ASBA works:
Step 1
When you are applying for a life and health insurance policy, you will have the option to allow your bank to block the premium amount in your account. Opting for this option in the form means that you are giving the bank the consent to block the required amount for premium payment [2].
Step 2
Using the facility provided by the National Payments Corporation of India or NPCI, the insurance company will approach your bank, requesting to block the premium funds in your account, through one of its partner banks [2].
Step 3
Upon receiving your explicit consent, the bank will block the specific amount required for premium payment. The partner bank is responsible for relaying this information to the insurer who will then pass the details on to you [2].
Step 4
This blocked amount will be held in the account without being debited to the insurer's account. However, the specific funds will not be available for any other transactions until the underwriting process is completed or the waiting period of 14 days has passed- whichever is earlier. During this timeframe, the blocked amount will continue to earn interest based on the bank's regulations [2].
Step 5
The blocked amount will be debited from your account only once the insurer approves the application and informs you about the decision [2].
Step 6
Once the policy approval and underwriting process is complete, the insurer will direct the partner bank to deduct the premium amount from the blocked funds in your account and transfer it to the insurer's account [2].
Step 7
If you choose to cancel the policy proposal, please inform the Insurer through a request by various modes provided for this purpose . The blocked amount will be released by the Insurer within one working day of receiving your request. Again, on rejection of the proposal by the Insurer the blocked amount will released within one working day of the rejection. [2].
Step 8
Consider the insurer fails to process your policy proposal within the 14-day deadline. Under this circumstance, the blocked funds in your account will be automatically released through the partner bank [2].
Know that the blocked amount in your account will be specific to the application form you have submitted. In case multiple forms are submitted, you need to avail Bima-ASBA facility separately for each. The insurer requires your explicit consent in the proposal form to block the funds [2].
For instance, the premium amount determined by the insurer after the completion of the underwriting process is lower than the premium funds blocked in your account. In this scenario, only the reduced amount will be deducted through this facility. On the other hand, if the premium amount exceeds the blocked amount, the insurer will seek your authorization to modify the mandate. This modification will be allowed only once and the 14-day waiting period will be applicable from the date of original mandate.
In case you wish to cancel your application before the insurer makes a decision on your proposal, you can submit a cancellation request through whichever mode provided by the insurer.
FAQs
When will the blocked amount be debited from my account?
Once the policy proposal is approved and issued, the insurer will inform both you and the bank about the decision, and direct the partner bank for the transfer of funds from your bank account to the insurer's account.
What happens if my policy application is rejected?
If your application is rejected or cancelled, the insurer will instruct the partner bank about the release of the blocked funds from your account immediately.
Who should I contact if I have problems with Bima-ASBA?
For assistance with any queries related to Bima-ASBA, you can contact your insurance company. You can contact your bank or UPI service provider for transaction related issues.
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