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Guide to Using Bima-ASBA and One-Time Mandate (OTM) for Life Insurance Premium Payments

Bima-ASBA, launched as an insurance payment method, by the Insurance Regulatory and Development Authority of India (IRDAI) was effective from March 1, 2025. The regulator has mandated all insurance companies to offer this facility to its prospects for life and health insurance policies. This initiative prescribes a One-Time Mandate (OTM) to block the amount towards premium payments from your account through the Unified Payments Interface (UPI). If you are wondering how to access the Bima-ASBA facility for your policy, this article will cover everything about OTM when you purchase life insurance.

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.
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 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.


FAQs


When will the blocked amount be debited from my account?


The blocked funds will be debited from your bank account and transferred to the insurer's account once the policy has been issued.


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


Contact your insurance company, bank or UPI service provider to help with any queries.


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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-13925/25

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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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