What is Bima-ASBA?
Bima-ASBA (Applications Supported by Blocked Amount) is a facility that allows insurers to temporarily block the premium amount in the customer's bank account when applying for a health or life policy. The amount will only be deducted if the policy is approved. If the insurer does not accept the application, the blocked amount will be released within a working day and be available for use.
Why Payment Failures Happen in Life Insurance
There are several reasons why premium payments might fail in life insurance policies. Understanding these reasons is key to recognizing how Bima-ASBA can address the problem:
Insufficient Funds:
One of the most common causes of payment failure is a lack of sufficient funds in the policyholder’s bank account. If the premium amount cannot be processed due to insufficient balance, the payment fails, and the policy may lapse.
Banking or Technical Issues:
Sometimes, the banking system or online payment systems face technical issues that cause payment delays or failures. These issues can range from server outages to transaction errors that prevent payment completion.
Incorrect Payment Details:
If incorrect payment information is entered, such as wrong bank account numbers or expired credit card details, it can lead to failed payments. This is often a result of human error when submitting payment requests.
Processing Delays:
Even with correct payment information and sufficient funds, sometimes payment transactions are delayed due to issues within the payment processing system of the insurer or intermediary.
How Bima-ASBA Reduces Payment Failures
One of the primary causes of lapsed insurance policies is the failure to pay premiums on time. A lapsed policy means losing the coverage benefits, and in some cases, policyholders may have to undergo medical examinations and re-underwriting to reinstate their policy. The Bima-ASBA facility helps prevent these issues in several ways:
Ensured Availability of Funds:
The required premium amount is set aside during the application process, ensuring it is readily available when needed.
Timely Payments:
UPI-OTM ensures that payments are made on time once the insurer approves the proposal, helping policyholders obtain life insurance policy easily.
Why IRDAI Introduced Bima-ASBA
In Bima-ASBA the insurance premium amount is blocked in the policyholder’s bank account until the insurer completes the underwriting process—an evaluation of the applicant’s health, income, and other risk factors—and decides whether to issue or reject the policy.
Here, insurers can initiate a one-time mandate to block the premium amount via UPI in the applicant’s bank account. The amount will only be debited after the insurer approves the proposal. If the proposal is rejected, the blocked amount will be automatically released back to the applicant without any deductions. In September 2024, IRDAI issued comprehensive guidelines to safeguard policyholders’ interests, clearly stating that premiums should only be paid after the insurer has communicated its decision on accepting or rejecting the policy proposal. The introduction of Bima-ASBA is aimed at ensuring the effective implementation of this directive by streamlining the premium payment process accordingly.
Conclusion
Payment failures in life insurance policies can cause unnecessary stress and result in policy lapse, loss of coverage, or financial implications. The introduction of Bima-ASBA offers a practical solution to reduce the chances of payment failures. By blocking the required funds in advance, and offering real-time tracking, Bima-ASBA provides a seamless and secure way for policyholders to ensure timely premium payment.
By following a few simple tips like maintaining sufficient funds, updating payment details, and using UPI for fast payments, policyholders can further enhance their experience with Bima-ASBA and keep their coverage active without interruption.
FAQs
What is Bima-ASBA?
Bima-ASBA (Application Supported by Blocked Amount) is a facility that helps ensure timely premium payments for life insurance policies by blocking the required amount in advance.
Why do premium payments fail?
Premium payments can fail due to insufficient funds, technical issues, incorrect payment details, missed deadlines etc.
Do I need to make any advance payment with Bima-ASBA?
No, policyholders do not need to make any advance payments before the proposal is approved.
How can I ensure successful payments with Bima-ASBA?
Maintain sufficient funds, update your payment information, enable notifications, track your payment status, and use UPI for quick payments.
How long will the amount be blocked for an insurance proposal?
The amount will be blocked for up to 14 days; if the insurer approves the proposal, it will be debited, and if rejected, the amount will be released within one working day. If no decision is made within 14 days, the amount will be automatically unblocked and stay in the customer's account.
Can the premium be paid through methods other than UPI for the Bima-ASBA facility?
No, currently the premium for the Bima-ASBA facility must be paid through UPI.
What should I do if I change my bank account or UPI ID?
Make sure to update your new bank account or UPI ID details with your insurer to avoid any payment discrepancies.
Can I use UPI to make payments through Bima-ASBA?
Yes, Bima-ASBA integrates with UPI for fast and convenient premium payments.
When will Bima-ASBA be available?
Bima-ASBA is set to be operational from March 1, 2025, for new policy purchases
An ISO 9001:2015 
