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Bima-ASBA: Future of Digital Payments In Life Insurance Sector With UPI

Digital payments are growing in India due increased smartphone and internet penetration, the speed and convenience they offer, government initiatives to promote digitization in the country etc. This has led to a major transformation in the insurance industry over the last few years, this shift to digitisation witnessed the introduction of Bima-ASBA (Applications Supported by Blocked Amount)- a new payment mechanism for insurance premiums via the United Payments Interface (UPI). This article will discuss the rise of digital payments in insurance and the key role Bima-ASBA plays in making premium payments simpler, safer and more accessible.

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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Bima ASBA: Insurance For All By 2047


The government of India has been actively promoting the integration of digital technologies into various sectors through initiatives such as Digital India, Make in India, and Startup India. Insurance is one such industry that is receiving the government’s support to employ digital tools. In fact, research had suggested earlier that the increase in internet users in India will lead to a significant rise in adoption of digital users in the country, with the numbers reaching 900 million by 2025.


Digital methods have appealed customers due to its convenience. From policy purchases to filing claims, everything can be done with just a few clicks. When the entire process is digital, people find making digital payments more convenient. This shift not only reflects the increase in the adoption of new technologies in various sectors but also serves as a response to changing customer preferences. Incorporating digital payments into insurance will only make it more accessible and user-friendly .


Bima ASBA via UPI is one of the convenient options to make first premium payments for your life insurance policies. Using UPI mandate for premium payment ensures quick and seamless transactions. .


How Bima-ASBA is Leading the Change


Considering all the above-mentioned reasons, the Insurance Regulatory and Development Authority of India (IRDAI) has introduced a new UPI-based payment system through OTM for the payment of insurance premiums called Bima-ASBA which will be in effect from March 1, 2025. This new system is applicable to life and health insurance policies; it'll allow you to block a specific amount of funds in your bank account for insurance payments. This amount will not be debited until your policy proposal is approved and the transactions will be carried out only after receiving your consent. In case the application gets rejected, the blocked funds in your account will be released within one working day .


Bima-ASBA aims to streamline the payment process for life and health insurance policies. Unlike traditional methods where the amount is debited for a premium upon completing the proposal form, Bima-ASBA requires you to authorise the blocking of funds for premium payments in your account through the UPI-OTM for up to 14 days . The maximum amount that can be blocked in your account is Rs.2 lakh . Since there is no upfront payment the money will remain blocked in your account till such time that underwriting decision is made or for a period of 14 days whichever is earlier.


The IRDAI has mandated all insurance companies to offer Bima-ASBA facilities to their policyholders. The insurance company will seek help from its partner bank to send a request to your bank to block the required amount in your account. Your bank will ask for your approval and will proceed to block the funds and notify the insurer once you agree. When the application gets approved by the insurer, they will inform you and request your bank to debit the blocked funds. The transfer will take place only upon receiving your consent .


With Bima-ASBA, while you can ensure that sufficient funds are available in your account for premium payments, it makes policy issuance secure and safe with the UPI-OTM method. This payment mechanism makes transactions seamless and hassle-free. Moreover, using Bima-ASBA’s digital payment facility promotes transparency, communication and safety.


FAQs


How does Bima-ASBA work?


Bima-ASBA allows you to block funds in your bank account through UPI’s One Time Mandate or OTM. The insurance company will review your application. Once approved, the blocked amount will be debited to the insurer's account. Upon rejection or cancellation, the blocked funds in your account will be released within one working day.


Is Bima-ASBA mandatory?


Although IRDAI has mandated all insurance companies to provide Bima-ASBA as a payment option for life and health insurance policies, you, as a policyholder, are free to choose your mode of payment .


What happens if my policy application is rejected?


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


Can UPI OTM (One-Time Mandate) be supported on RuPay Credit Cards?


Yes, UPI OTM can be supported on RuPay Credit Cards, allowing users to set up recurring payments directly through their credit card.


What is UPI OTM?


UPI OTM or One Time Mandate is one of UPI’s features that enables users to block funds in their bank account. It is a one-time setup, which helps you ensures timely and secure payment option for your advance payments, life insurance policy payment etc.


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


You can contact your insurance company for issues related to Bima ASBA payments and, bank or UPI service provider for assistance with any queries related to transaction.


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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-14337/25

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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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