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Enhancing Life Insurance Payment Transparency with Bima-ASBA

Safeguarding the future of loved ones has always been one of the core goals in financial decisions. Life insurance thus continues to be in demand as a crucial investment. From September 2024, IRDAI mandated for insurance premiums to be paid only post the policy approval.

Identifying the need to enhance transparency and payment options for policy applicant in life insurance payments, the Insurance Regulatory and Development Authority of India (IRDAI) has now introduced Bima-ASBA as a new payment mechanism.

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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How Bima-ASBA improves transparency?


To understand how Bima-ASBA (Applications Supported by Blocked Amount) contributes in improving transparency of life insurance payments, you may first need to know what it exactly is and the way it functions.


Bima-ASBA is a newly introduced payment mechanism for life and health insurances which operates through UPI (Unified payment Interface). This facility in life insurance, mandated by IRDAI has to be included in policy proposals as a payment option. It enables the policy seeker to authorize UPI payment towards the premium during a policy purchase through OTM (one-time mandate). Here the insurer sends a request through its partner bank to block the proposed premium account in the applicant’s bank account until the policy application gets approved. The amount remains blocked for 14 days or till such time the underwriting decision is made whichever is earlier. If the policy is not approved by the insurance company, the funds will be released back into your bank account within one working day.


Also, if the underwriting process gets delayed, the blocked amount gets automatically released after 14 days. Moreover, in case of policy approval, the final premium after underwriting gets debited from the blocked amount. If the final premium is less, the residue amount is refunded to the account while a fresh OTM for debit is required in case it’s higher.


So, how does this process enhance transparency in life insurance payment? Here’s a glance.


  • With Bima-ASBA the applicant will be informed at each stage of Bima ASBA i.e. blockage of the amount, initiation of debit and the unblocking of the amount.
  • The payment mechanism works through authorization of payment by the policy seeker at every step, thus eliminating the scope of unauthorized payments.
  • The authorized amount stays blocked in the applicant’s account, deferring actual payments till the policy approval. This ensures there’s no shortage of fund when the premium payment takes place and helps avoid transaction failures.
  • The premium gets debited once the policy gets approved and the applicant is notified of the same by the insurer. In case of policy rejection/cancellation too, the blocked amount gets released within one working day following alerts and instructions of the insurer. In turn, ambiguity regarding policy approval gets minimized as you keep getting the real-time updates.
  • Post the underwriting, the final premium amount gets debited from the blocked amount. Residue, if any, is reversed to the account while the policy seeker needs to authorize fresh payments in case of shortfall. This again closes the scope of unauthorized payments or hidden costs.

How to check your payment status in Bima-ASBA?


As per the IRDAI mandate, you can opt for Bima-ASBA for the life insurance payment by filling out a standard declaration form along with the policy proposal. The facility gets active once you accept the blocking request by the insurer to keep the proposed premium amount on hold in your bank account. The newly introduced payment mechanism operates on UPI payment authorisations by the policy applicant and corresponding alerts and instructions.


So how do you check your payment status in Bima-ASBA?


Following the authorisation from the applicant, the Bima-ASBA facility is designed to keep the proposed premium account blocked in your account till the policy approval happens. It gets debited when the policy is approved, released if the policy proposal gets rejected/cancelled, and automatically released if the 14-day waiting period is over. Also, in case of policy approval, it’s the final premium amount determined by the underwriting that gets debited from the blocked amount. In case of shortfall, the applicant has to issue a fresh OTM for the excess payment. Each of these situations is notified to the policy applicant by the insurer through its partner bank and corresponding alerts by the UPI platform. Hence, keeping a check on these alerts providing real-time updates of the application and corresponding debit or refund, you may get an idea of the payment status of your life insurance premium in Bima-ASBA.


Conclusion


The recent IRDAI directive to include Bima-ASBA as a UPI-based payment option in life insurance policy proposals is based on their Master Circular in September 2024 conveying protection of the policyholders’ interest. The insurers have been putting forward requests of enabling one-time mandate of UPI for premium payments.


FAQs


  1. What is Bima-ASBA?


    Bima-ASBA (Applications Supported by Blocked Amount) is a payment facility that allows new policyholders to authorize the blocking of funds in their bank account for insurance premium payment. The funds are debited only upon policy issuance, ensuring enhanced security and transparency.


  2. How does Bima-ASBA benefit policyholders?


    This mechanism prevents unauthorized deductions by ensuring that the premium amount remains in the policyholder's account until the policy is issued. It enhances transparency and security in premium payment.


  3. Is there a limit to the premium amount that can be blocked using Bima-ASBA?


    Bima-ASBA facility can block premiums up to the limit specified by the National Payments Corporation of India (NPCI) from time to time.


  4. How does Bima-ASBA integrate with UPI?


    Bima-ASBA utilizes the Unified Payments Interface (UPI) to facilitate the blocking and subsequent debiting of funds for premium payment, ensuring a seamless and efficient transaction process for policyholders.


  5. What happens if the policy application is rejected?


    If the policy is rejected or cancelled, the blocked funds are automatically released to the policyholder’s bank account within one working day.


  6. Who can use Bima-ASBA for premium payments?


    Any individual purchasing a life insurance policy can use Bima-ASBA, provided their bank supports the facility and they have sufficient funds in their account at the time of application.


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Disclaimers:
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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-14079/25

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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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