Bima-ASBA: Simplifying Life Insurance Payments with UPI Technology

The Challenges of Traditional Insurance Payments

To understand the rationale behind IRDAI’s introduction of this facility, it’s crucial to identify the challenges of the traditional payment structure of the life insurance policy purchase. Here’s an overview. To buy a life insurance policy through the traditional payment format, one needs to apply for the same with a filled-in proposal form, relevant documents, and the first premium payment either online or through a cheque in the offline mode. The money gets deducted immediately while the proposal awaits an approval from the insurance company and the policy issuance thereafter. To check the validity of the policy proposal and verify the details and documents shared, the insurer follows an underwriting process and may seek further documents or conduct medical tests if needed. The procedure may take about 15 days, and the premium paid lies with the insurer for the entire phase. The applicant might not have a clue about whether there’s any deduction for unauthorised charges, and there’s no guarantee either that the policy would get approved. Offering the Bima-ASBA facility is thus an attempt by IRDAI to sort these issues faced by those looking to purchase an insurance policy.

How Bima-ASBA solves these problems

Knowing how Bima-ASBA solves the payment issues in a policy purchase may lead to a smooth policy purchase. But before digging deeper, here’s a clarity of how Bima-ASBA can be useful.

What is Bima-ASBA?

Mandated by IRDAI since March 01, 2025, Bima-ASBA is a new payment mechanism for life and health insurance purchases. As per their recent circular, this method is to be compulsorily included in a policy proposal form as a payment option for the first premium. Under this framework, the insurer seeks authorisation from the policy seeker via UPI to block the payment towards the first premium. The said amount gets deducted only when the proposal is accepted by the insurer and the policy issuance is ensured. The amount gets immediately released if the policy application gets rejected or cancelled, or automatically after expiry of 14 days from the date of initial blocking of funds. So, here’s how Bima-ASBA helps in smoothening your policy issuance:

• Bima-ASBA ensures that the policy applicant gets more control over the transactions, operational ease .
• The premium gets deducted from the blocked amount only after the policy issuance is approved, and the remaining amount (if any) is released within one working day. This ensures a hassle-free and secure transaction method at your fingertips.
• In case of a policy rejection or cancellation, the blocked amount gets released within one-working day, ensuring a smooth and quick refund of the premium, thereby saving the applicant’s time and money. The amount is also unblocked after expiry of 14 days from the initial date of fund blocking.
• Elimination of the uncertainty and apprehensions thus makes Bima-ASBA an efficient insurance payment process.

Step by step process to pay life insurance premiums through Bima-ASBA

Opting for Bima-ASBA for a policy purchase may be a convenient choice for those looking for a smooth and secure experience. Here’s a step-by-step guide that you can follow.

• Opt for Bima-ASBA as the premium payment mechanism through a standard declaration while applying for the policy.
• Instead of immediate payment, you’ll get to authorise and instruct your bank to block the premium amount via a UPI platform. The blocking request will be sent by the insurer through its partner bank.
• Upon the explicit consent, the authorised amount will get blocked, and the same will be notified to the partner bank and the insurer, and consequently to you.
• The blocked amount will not be available for any other transaction till the completion of insurance underwriting or the 14-day waiting period, whichever is earlier.
• The premium will get debited from the blocked amount only if the policy gets approved. The partner bank will deduct the premium and transfer the same to the insurer. The residue amount, if any, will be released immediately.
• In case of proposal rejection or cancellation, or if the waiting period is over, the blocked amount will get released without further deduction as per the instruction of the insurer.

Comparing Bima-ASBA with other Payment Methods

Here’s a glance at a comparative study of Bima-ASBA versus the traditional insurance payments.

Conclusion

Life insurance being a crucial choice of investment, a hassle-free, secure, and transparent process of paying premiums may be an added relief for many. Undoubtedly, IRDAI has also attempted the same by mandating the inclusion of Bima-ASBA as a payment method. It’s the policy applicants who’ll have to choose it to reap the benefits.