Overcoming Challenges in Availing Life Insurance Through Bima ASBA

Limited Awareness and Understanding

Challenge:

Potential applicants might not be aware of the Bima ASBA facility and could be unclear about application procedure.

Solution:

Take an active initiative to seek advice from your Insurance companies and/or financial advisors and make yourself aware of Bima ASBA. You could also refer to online content that explain features of Bima ASBA in detail. Remember if you keep yourself well-informed you can opt where you wish to opt for Bima ASBA or traditional payment method.

Technical Challenges with UPI Integration

Challenge:

Certain applicants can experience technical challenges in mapping their UPI accounts to the Bima ASBA system, resulting in transaction failures or delays.

Solution:

To minimise technical problems, applicants must keep their UPI accounts active and ensure they have adequate transaction limits to cover the premium amount. Insurance companies can partner with banks and UPI service providers to provide smooth integration and diagnostic support for typical technical issues.

Inadequate Funds Causing Application Rejection

Challenge:

When the applicant's bank account does not have adequate funds to pay the premium amount while blocking, the Bima ASBA process cannot proceed, causing application delays or rejection.

Solution:

Applicants can check their account balances before starting the Bima ASBA process to confirm that sufficient funds are available. Low-balance alerts given by the Bank can also be referred to ensure adequate funds for premium payments.

How To Use OTM (One Time Mandate)

Policyholders can simplify their premium payment process by following these steps:

1. Choose BIMA-ASBA

   
   

   Select BIMA-ASBA as the payment method while purchasing the policy.

   
   

2. Fund Blocking Request

   
   

   The insurer, via its banking partner, requests to block the premium amount.

   
   

3. Consent & Confirmation 

   
   

   The policyholder provides consent, and the bank notifies the insurer once funds are blocked.

   
   

4. Funds on Hold 

   
   

   The blocked amount remains in the policy applicant’s account until policy approval. But do note that you won’t be able to use these funds for any transactions till such time the underwriting decision is made by the Insurer.

   
   

5. Premium Payment 

   
   

   Upon approval, the insurer instructs the bank to release the funds.

   
   

6. Refund on Rejection

   
   

   If the policy is cancelled or rejected, the full blocked amount is released back to the policyholder within one working day.

   
   

Conclusion

Bima ASBA is a big leap in the ease of premium payments for life insurance policies in India. Granting the ability to block money instead of instant debiting gives applicants better control and security over their finances.

FAQs

1. What is the UPI-linked Bima-ASBA facility?

   
   
   • Bima-ASBA (Application Supported by Blocked Amount) is a payment method that allows policyholders to authorize the blocking of a specified premium amount in their bank account using UPI's One-Time Mandate (OTM). The premium is debited only after the insurer approves the policy.

2. How does Bima-ASBA benefit policyholders?

   
   
   • Policyholders' funds remain in their accounts and continue to earn interest during the policy approval process. The premium amount is debited only upon policy issuance, ensuring better fund utilization and transparency.

3. What happens if my insurance application is rejected?

   
   
   • If the insurer declines the policy application, the blocked funds are promptly released back into your account within one working day, eliminating the need for refund processing.

4. Is there a maximum limit for the premium amount under Bima-ASBA?

   
   
   • Yes, the Bima-ASBA facility allows for the blocking of premium amounts up to ₹2 lakh using UPI's One-Time Mandate.

5. Which insurers currently offer the Bima-ASBA facility?

   
   
   • Bajaj Allianz Life Insurance is among the first insurers to launch the Bima-ASBA facility. It's advisable to check with your insurer to confirm the availability of this payment option.

6. How does Bima-ASBA impact the interest earned on my bank account?

   
   
   • Since the premium amount remains in your account until underwriting decision is made or 14 days whichever is earlier, and may continue to earn interest as per the extant legal provisions applicable to banks.

7. Can I use Bima-ASBA for all types of insurance policies?

   
   
   • The availability of Bima-ASBA may vary depending on the insurer and the type of insurance policy. It's recommended to consult with your insurance provider to determine eligibility.

8. What are the steps to use the Bima-ASBA facility?

   
   
   • To utilize Bima-ASBA, select it as your payment method when purchasing a policy. Authorize the blocking of the premium amount via UPI's One-Time Mandate. The funds will be blocked in your account and debited only upon policy approval.

9. Does Bima-ASBA ensure faster refunds?

   
   
   • Yes, since the funds are only blocked and not debited until policy approval, any rejection results in immediate release of the blocked amount, facilitating quick access to your funds.

10. Is Bima-ASBA similar to the ASBA facility used for IPO applications?

    
    
    • Yes, Bima-ASBA is modeled after the ASBA facility used in IPO applications, where funds are blocked in the applicant's account and debited only upon allocation, ensuring efficient fund management.