How Policyholders Will Benefit from UPI-Linked Bima-ASBA Facility for Premium Payments!

No Upfront Premium! How UPI-Linked Bima-ASBA Benefits Policyholders !

Thanks to the UPI-enabled Bima Applications Supported by Blocked Amount (Bima-ASBA) facility, insurance-seekers in India will now be able to buy an insurance cover without paying the premium upfront. This new initiative, mandated by the Insurance Regulatory and Development Authority of India (IRDAI), will come into effect on March 1, 2025.

Bima-ASBA ensures that policyholders do not have to make an immediate payment while applying for an insurance policy. Instead, the amount gets blocked in their bank account and is deducted only if the insurer accepts the proposal. This will improve financial flexibility for insurance buyers while streamlining the process for insurers.

What is Bima-ASBA?
How Does Bima-ASBA Work?
Key Benefits of Bima-ASBA for Policyholders
Process to Use Bima-ASBA
Timeframe for Blocking and Debiting Amount
Eligibility and Availability of Bima-ASBA
Implementation Timeline for Insurers
Conclusion

What is Bima-ASBA?

Bima-ASBA is a Unified Payment Interface (UPI)-enabled system that allows insurance applicants to block a certain amount in their bank accounts instead of making an upfront payment. This amount is debited only if the insurer accepts the proposal, and if rejected, the funds are automatically unblocked.

This facility is modeled after UPI-linked ASBA (Applications Supported by Blocked Amount), which is already being used in IPO applications.

How Does Bima-ASBA Work?

When applying for an insurance policy, customers will be given an option to block the premium amount instead of paying immediately.
The insurance company will conduct its underwriting process, which includes assessing the applicant’s risk profile, medical history, and income.
The blocked amount remains in the policyholder’s bank account but is not debited until the insurer decides on the application.
If the policy is approved, the amount is debited.
If the policy is rejected, the blocked amount is released back to the policyholder.

Key Benefits of Bima-ASBA for Policyholders

1. No Immediate Payment Required

With Bima-ASBA, insurance-seekers do not have to pay upfront, reducing the financial burden while applying for an insurance policy.

2. Earn Interest on Blocked Funds

Since the premium amount remains in the policyholder’s bank account until approval, they continue earning interest on their savings.

3. Faster Refunds for Rejected Applications

In case the insurer rejects the application, the blocked amount is automatically unblocked within one working day, ensuring a hassle-free experience.

4. Reduces Administrative Hassle

Applicants no longer have to track refunds for unsuccessful applications, as the amount remains in their account until final approval.

5. Transparency and Trust

The process is regulated by IRDAI, ensuring a fair and transparent system for insurance buyers.

Process to Use Bima-ASBA

Select the Bima-ASBA payment option while filling out the insurance proposal form.
Authorize a One-Time Mandate (OTM) via UPI, blocking the required amount.
The insurer will conduct underwriting and evaluate the application.
If approved, the amount is debited from the customer’s account.
If rejected, the amount is released automatically within one working day.

Timeframe for Blocking and Debiting Amount

Maximum Blocking Period: 14 days
Decision by Insurer: Within 14 days
Funds Unblocked: Automatically after 14 days if no decision is made
Funds Debited: Only after policy approval
Refund in Case of Rejection: Within one working day

Eligibility and Availability of Bima-ASBA

Available for policies with premiums up to Rs 2 lakh.
Can only be used for UPI-based premium payments.
Not applicable for payments via debit cards, credit cards, or net banking.

Implementation Timeline for Insurers

IRDAI has set March 1, 2025, as the deadline for all insurers to offer Bima-ASBA.
Insurance companies need to upgrade their systems to integrate the new payment mechanism.
Policyholders should check with their insurers regarding the availability of this feature.

Conclusion

Bima-ASBA is a game-changer for insurance seekers in India. By allowing policyholders to block premium amounts instead of paying upfront, it brings greater financial flexibility, transparency, and convenience. With interest earnings intact and hassle-free refunds, policy buyers can now enjoy a smoother and more efficient insurance application process. As insurers work towards implementing this facility, policyholders should stay informed and leverage this new option for a better insurance-buying experience.