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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