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Top Mistakes to Avoid When Using Bima-ASBA for Life Insurance Premium Payments

The introduction of a UPI-based system, Bima-ASBA for life insurance and health insurance payments is a part of the Insurance Regulatory and Development Authority of India’s (IRDAI) broader initiative to upgrade insurance payment practices. Through Bima-ASBA, IRDAI aims to achieve improved transparency during insurance payments, and enhanced customer security. That being said, the success of this initiative primarily depends on two factors, proper implementation by insurers and awareness among policyholders. Read More

This move from the regulator further highlights IRDAI’s efforts to eliminate unauthorised deductions, ensuring that premium payments are collected only upon policy acceptance. Insurers are instructed to integrate Bima-ASBA into their systems starting from March 1, 2025. Bajaj Allianz Life became the first insurer to go live with Bima-ASBA.

To help you understand Bima-ASBA better, we will discuss some of the common mistakes that policyholders make while using Bima-ASBA and how to resolve them. Read Less

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Written ByPalak Bagadia
AboutPalak Bagadia
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Palak Bagadia, Associate – Digital Marketing at Bajaj Allianz Life, with experience spanning content and performance marketing, recruitment, employee engagement in the BFSI industry, with a strong understanding of the insurance sector.
Reviewed ByRituraj Singh
AboutRituraj Singh
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Rituraj Singh,With over 6.5 years of experience in the insurance industry, Rituraj Singh, Manager- Product & Brand Marketing at Bajaj Allianz Life Insurance overlooks new product launches, compliance, and brand projects, leveraging artificial intelligence and technology to enhance outcomes.
Written on: 31st March 2025
Modified on: 1st April 2025
Reading Time: 14 Mins
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Top Mistakes Policyholders Make

Although the goal of the Bima-ASBA facility is to make your insurance payments easier, there are some challenges you need to be aware of.. Since most new policyholders remain confused about fund blocking or are sceptical about access, there is an increased likelihood of making some common mistakes.

Before blocking the premium amount from your account, Bima-ASBA will require explicit consent from you. The blocking process will not be carried out in case you fail to provide this consent through the proposal form . Upon approving your policy, your insurer will ask for your authorization to debit your blocked amount for premium via OTM (One-time Mandate). If you fail to authorise this debit, the bank cannot proceed with the payment, and thus, your policy will not be issued.

If your proposal gets rejected by any chance or you decide to cancel it, the blocked amount should released within one working day from the date of non-acceptance of the proposal form;

This blocked amount will remain in your account until the insurer makes a decision on your application. The block is valid for a time period of 14 days or until the insurer makes a decision (whichever is earlier) . Let's say, the insurer could not make the decision within these 14 days. Then, your blocked money will be automatically released. Again, in case you fail to check your unblocked funds, it will lead to inconvenience.

How to Avoid Mistakes When Opting for Bima ASBA?

  • Although, you cannot avail Bima-ASBA facility for your existing policy now, you have the option to use this service for any new policies you may apply for.
  • When you apply for any new policy, you need to fill out a form to allow the bank to block money in your bank account.
  • Make sure that you give your consent to block the premium amount through the proposal form. Once your proposal is approved, authorise the debit of your blocked amount after carefully reviewing the instructions provided by the insurer.
  • Upon cancellation or rejection of your application, check in with the insurer or your bank to get confirmation on the release of your blocked funds.
  • Once applied for an insurance policy, ensure you keep track of the 14-day deadline, and the blocked amount gets released in case the application gets rejected or no decision is made in those 14 days.

Bima-ASBA allows policyholders to use UPI (Unified Payments Interface) for the One Time Mandate (OTM) facility. This initiative enables policyholders to authorise the blocking of a specific amount in their bank account until the policy application is approved. You can block up to Rs.2 lakh in your account. Once the underwriting process is completed and the application is approved, this money will be debited to the insurance company. In case the application is not processed within the said 14 days or the underwriting decision (whichever is earlier), the blocked funds in your account will be automatically released. This not only ensures that your money remains accessible but also enables you to continue earning interest until your application gets approved.

 

FAQs

 

How does Bima-ASBA work?

Bima-ASBA facility allows you to block a specific amount in your bank account for premium payments through UPI before your policy application is approved.

Which insurance policies are eligible for Bima-ASBA?

Currently, you can avail the Bima-ASBA facility for life and health insurance policies.

Is Bima-ASBA mandatory?

Although IRAI has instructed all life and health insurance companies to offer Bima-ASBA as a payment option on life insurance and health insurance policies, the policyholders are free to choose between the traditional and UPI-based payment methods.

What is UPI OTM?

UPI OTM or One Time Mandate is a UPI feature that allows you to block money in your account. It helps in simplifying the recurring or future payments.

Can I earn interest on the blocked amount?

Yes, since the blocked amount remains in your bank account until the policy proposal is approved, you will continue to earn interest on the money based on your bank's terms.

What happens if my policy application is rejected?

In case your policy application gets rejected, the blocked amount in your bank account will be released within one working day.

When will the blocked amount be debited from my account?

The blocked amount will be debited from your account only after the policy has been issued by the insurer.

Who should I contact if I have problems with Bima-ASBA?

Contact your insurance company for assistance on any queries related to Bima-ASBA. You can also reach out to your bank or UPI service provider for the same.

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The views stated in this article are not to be construed as investment advice and readers are suggested to seek independent financial advice before making any investment decisions. For more details on risk factors, terms and conditions please read the sales brochure & policy document (available on www.bajajallianzlife.com) carefully before concluding a sale.. Bajaj Allianz Life Insurance Company Ltd., Regd. office Address: Bajaj Allianz House, Airport Road, Yerawada, Pune - 411006, Reg. No.: 116, CIN: U66010PN2001PLC015959, Call us on toll free No.: 1800 209 7272, Mail us: customercare@bajajallianz.co.in

 

BJAZ-WEB-EC-13877/25

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Disclaimer

*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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Terms & Conditions

I hereby authorize Bajaj Allianz Life Insurance Co. Ltd. to call me on the contact number made available by me on the website with a specific request to call back. I further declare that, irrespective of my contact number being registered on National Customer Preference Register (NCPR) or on National Do Not Call Registry (NDNC), any call made, SMS or WhatsApp sent in response to my request shall not be construed as an Unsolicited Commercial Communication even though the content of the call may be for the purposes of explaining various insurance products and services or solicitation and procurement of insurance business

 

Please refer to BALIC Privacy Policy

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%%Above illustration is for Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V03) considering Male aged 25 years | Non-Smoker | Policy Term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 1,00,00,000 | Online Channel | Standard Life | 1st Year Premium is Rs. 6,238. 2nd Year onwards premium is Rs. 6,659. Total Premium Paid is Rs. 1,99,349 | Medical Rates | Yearly Premium Payment Mode | Death benefit opted is lumpsum payout and monthly installments (Lumpsum Payout Percentage : 45, Income Payout Percentage : 55) | Premium shown above is exclusive of Goods & Service Tax/any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only. This is inclusive of all the discounts mentioned above.

##Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

@Term Insurance plan bought online directly from Bajaj Allianz Life Insurance has no commissions involved.

^^The Return of Premium amount is total of all the premiums received, exclusive of extra premium, rider premium and GST & /any other applicable tax levied, subject to changes in tax laws
Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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Disclaimer

Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V04)

*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116


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Disclaimer

*Above illustration is for Bajaj Allianz Life eTouch II - A Non-Linked, Non-Participating, Individual Life Insurance Term Plan (UIN:116N198V01) considering Male aged 25years | Non-Smoker | Policy Term(PT)– 30 years | Premium Payment Term (PPT)– 30 years | Sum Assured opted is Rs.1,00,00,000 | Online Channel | Standard Life | 1st Year Premium is Rs. 5,092. 2nd Year onwards premium Rs. 5,520. Total Premium Rs. 1,65,172 | Medical Rates | Yearly Premium Payment Mode | Death benefit opted is lumpsum payout and monthly instalments (Lumpsum Payout Percentage: 40, Income Payout Percentage: 60). Income payout instalment opted for 40 years | Premium shown above is inclusive of Online Discount only, no other discounts have been considered and exclusive of Goods & Service Tax/ any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only. For more details on risk factors, terms and conditions please read sales brochure & policy document (available on www.bajajallianzlife.com) carefully before concluding a sale.

##Tax benefits as per prevailing Section 10(10D) and Section 80C (under old tax regime) of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

**5% Discount applicable for customer's first individual life insurance policy, applicable only on first year’s premium. 5% Discount for salaried customers, applicable only on first year’s premium. 6% Discount on online purchase is available for regular premium payment and limited premium payment frequency on first year's premium.

$Term Insurance plan bought online directly from Bajaj Allianz Life Insurance has no commissions involved.

^^The Return of Premium means total of all the premiums paid under the base product, excluding any extra premium and taxes, if collected explicitly.

Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

X
Terms & Conditions

I hereby authorize Bajaj Allianz Life Insurance Co. Ltd. to call me on the contact number made available by me on the website with a specific request to call back. I further declare that, irrespective of my contact number being registered on National Customer Preference Register (NCPR) or on National Do Not Call Registry (NDNC), any Call made, including via Voice over Internet Protocol & WhatsApp, SMS or WhatsApp messages, in response to my request shall not be construed as an Unsolicited Commercial Communication even though the content of the call may be for the purposes of explaining various insurance products and services or solicitation and procurement of insurance business

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