How To Use OTM For Life Insurance Premium Payments With Bima-ASBA

Calling From	Phone Number
Calling us from INDIA	18002097272 (Toll Free)
Rest of the World	+912067871700 (Call charges apply)

Bima-ASBA and OTM (One-time Mandate)

Bima-ASBA provides policyholders with the choice to opt for UPI’s OTM, enabling them to authorise the blocking of a specific amount in their bank account. This amount will be debited only when the policy proposal gets approved by the insurer and the underwriting process is completed. If the application is declined, cancelled or is not processed within 14 days, the blocked funds in your account will be automatically released by the insurer.

Step-by-Step Guide to Setting Up OTM (One-time Mandate) via Bima-ASBA

Step 1

When you are applying for an insurance policy, you will be provided with a form which includes the option for allowing your bank to block a designated amount (upto ₹2 lakh) for premium payment. By opting for that facility, you will give the bank consent to block the premium amount.

Step 2

The insurance company will send a request to your bank to block the premium funds through one of its partner banks. This process is carried out by using the facility provided by the National Payments Corporation of India (NPCI) .

Step 3

After receiving this request, the bank will check in with you for your approval. After receiving your explicit consent, the bank will block the specified funds and inform the partner bank about the same via UPI. The partner bank will relay this information to your insurance company who will then inform you.

Step 4

The blocked funds will be held in your bank account without being debited. However, this amount will not be available for any transactions until the underwriting decision is made. The insurers are given a 14-day timeframe to decide on your policy proposal. During this waiting period, the blocked amount in your account will continue to earn interest income based on the banking regulations.

Step 5

The said blocked amount will be debited from your account in case of acceptance of the proposal by the insurer and after communicating the decision of acceptance to the you. In case you decide to cancel the application or your policy proposal gets rejected, the blocked amount will be released within one working day.

Step 6

Once approval and underwriting of the policy is done, the insurer will instruct its partner bank to deduct the premium amount from the blocked funds in your account and transfer it to the insurer’s bank account. Upon rejection or cancellation of the application, the insurer directs the partner bank to release the blocked amount. Based on this instruction, your bank will then unblock the blocked funds. There will not be any deductions made.

Step 7

If the insurer fails to process your application within the 14-day deadline, the blocked funds in your bank account will be automatically released by the insurer with the help of the partner bank.

Keep in mind that the premium amount blocked is specific to the proposal form that you submit. If there are multiple forms, the Bima-ASBA facility will have to be availed separately for each. In case the premium amount determined by the insurer is lower than the blocked amount, only the reduced amount will be deducted. On the other hand, if the premium amount exceeds the initially blocked funds, the insurer will have to obtain authorisation from you to modify the mandate accordingly. This modification can be made only once. However, the waiting period will still be applicable from the date of the original mandate for blocking the money. In case you wish to cancel the application before the insurer makes an underwriting decision, you can submit a request for cancellation of the proposal. The blocked amount should be released by the insurer within one working day.

Advantages of Automating Insurance Premiums

You can enjoy the following benefits by automating insurance premiums:

With Bima-ASBA, the premium amount will be automatically debited from your account once the policy is issued. This will not only eliminate the need for manual transactions.
Bima-ASBA facility simplifies the payment process allowing your funds to remain in your account until the policy is issued. While no immediate payment is required in this process, it ensures that the funds are available when needed.
By allowing you to keep the blocked funds in your account until policy approval, it provides you with financial flexibility. Along with the benefit of earning interest income on your blocked funds, it also helps with the effective management of your cash flow.
Bima-ASBA promotes transparency as you are informed of the policy approval before any premium amount deduction is made. It ensures your control over your funds.
In case of rejection or cancellation of your policy proposal, the blocked amount is automatically released to your account within one working day.
Since Bima-ASBA uses UPI as the platform for transactions, you can rest assured that your premium payments are processed safely and efficiently.

Conclusion

By automating premium payments through Bima-ASBA, IRDAI is aiming to make insurance more accessible and user-friendly. While the Bima-ASBA facility empowers policyholders, it also streamlines the operations of insurance companies.