Call for plain vanilla product to attract youngsters - IRDAI Plans | RenewBuy

Call for plain vanilla product to attract youngsters - IRDAI Plans

Call for Plain Vanilla Product to Attract Youngsters – IRDAI Plans

The Indian life insurance industry is poised to grow at the rate of 12 to 15% annually during the next three to five years. Though the scenario looks promising, the insurance penetration in our country is still low at 3.69% at the end of 2017 in terms of premium percentage of GDP of the Indian economy.

It needs no mention that this leaves a huge uninsured population in the country. The remarkable demographic shift reflected in the growing middle class with increased general awareness has encouraged the IRDA to give a call for plain vanilla product to attract youngsters directed towards a meaningful impact on the insurance coverage.

The Importance of Plain Vanilla Products in Insurance

The Indian insurance industry boasts of 57 insurance companies vying for space offering innumerable insurance products. The generous use of incomprehensible jargon leaves the potential customers utterly confused. Coupled with the anathema towards accepting insurance as a financial product for protection rather than an instrument of investment, the envisaged growth rate was never achieved. The regulatory body of insurance in the country IRDA, has given a call for plain vanilla product to attract youngsters, who constitute a major area of thrust for a larger insurance audience. In other words, IRDAI has proposed standardized no-frill insurance plans across all insurers which is easy to understand aimed at attracting a large cross-section of the uninsured populace.

IRDAI Plans for Plain Vanilla Product in Health Insurance

The primary aim of IRDAI is to standardize insurance products that will not only attract but also incentivize the potential policyholder but also woo the youngsters into the insurance net. The draft proposals of IRDAI spelling out the norms for general insurance products, especially health aims to provide basic mandatory covers uniformly across the market. On the flip side, the IRDAI has mandated that these standard covers will not be combined with add-on features like critical illness or other related optional benefits. The intention is to restrict the sale of health insurance only to the extent required for the individual and obviate the propensity of the insurers to impose ornamental elements. Whereas, a standard product with such attributes as hospitalization expenses involving both the traditional and alternative forms of medicine will not only be simple to comprehend and easy on the pocket, but also be reason enough for the initiated to stay insured through regular renewals.

IRDAI Plans for Plain Vanilla Product in Traditional Life Insurance

The overall impact of the call for plain vanilla product to attract youngsters – IRDA plans in the traditional life insurance sector is profound and farreaching as defined in the guidelines formulated by them. The makeover of the plans in consonance with the set norms encompasses as diverse aspects as the minimum sum assured, terms, guaranteed surrender values and cap on the payable commissions to the agents. It is likely to influence the margins of the insurers but is beneficial to the policyholder. The move is intended to increase transparency and obviate rampant mis-selling of products which is par for course in the industry.

Benefits of Plain Vanilla Products

Irrespective of the effect on the margins of the insurer, the IRDA plans related to plain vanilla product offers a host of benefits to the youngster to purchase an insurance product, thus spreading the insurance net over a large section of our uncovered population. Some of the key benefits are:

  • Enhanced Exposure: The draft IRDA health plan for plain vanilla products proposes the incorporation of wellness features such as health check-up and consultation services.
  • Cumulative Bonus: The plain vanilla product in health insurance is set to offer a 5% bonus for every claim-free year to a maximum of 50% of the sum insured.
  • Basic Term Plan: This plain vanilla product is slated to add flavors where your nominee is paid monthly income option in lieu of a lump-sum payment on your demise. Even the return of premium is a possibility.
  • Decreasing and Increasing Term Plan: It is a feature which allows you to alter your sum assured in future depending on your specific needs.
  • Convertible Term Plan: It allows you to switch to a savings plan later, without opting for a new policy and fresh underwriting.


With the call for plain vanilla product to attract youngsters – IRDA plans to boost the general insurance cover to the Indian population by simplifying the complex insurance scenario with rudimentary uniform low-cost policies. The plain vanilla product is designed to impress the idea of protection through life insurance, rather than being only a tool for investment.

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