New Rule from March 1: Pay Insurance Premiums Using UPI Blocked Amount, Says IRDAI
Starting March 1, 2025, paying for life and health insurance premiums will become more seamless with the introduction of the Bima-ASBA facility. The Insurance Regulatory and Development Authority of India (IRDAI) has mandated that insurers offer this payment option, which allows policy buyers to block funds in their bank accounts via Unified Payments Interface (UPI) One-Time Mandate (OTM). This ensures smooth transactions without immediate debits.
Bima Applications Supported by Blocked Amount (Bima-ASBA) is a new facility that enables customers to authorize a block on a certain amount in their bank account for insurance premiums. The actual debit happens only after the insurer accepts the policy proposal. If the proposal is not accepted, the blocked amount is automatically released.
Prospects can authorize insurers to block a certain amount in their bank account through UPI OTM.
The blocked funds remain untouched until the insurance policy is issued.
If the policy is approved, the premium amount is debited.
If the proposal is rejected, the funds are unblocked and released within one working day.
Mandatory for insurers: All insurance companies must offer Bima-ASBA for life and health policies.
Optional for customers: Policy buyers are not obligated to use Bima-ASBA and can opt for other payment methods.
No extra charges: Insurers cannot levy additional fees for this facility.
Clear communication: Customers must be informed at every stage—blocking, debit initiation, and unblocking.
14-day validity: The blocked amount remains valid for a maximum of 14 days or until the underwriting decision is made.
To ensure smooth execution, insurers must collaborate with multiple banks, set up proper systems and processes, and have the necessary contractual agreements. The Life and General Insurance Councils are required to finalize the standard declaration form for policyholders within one week of the circular’s issuance.
Bima-ASBA aims to enhance convenience and security for insurance premium payments , ensuring funds are available while reducing transaction failures. With no upfront debit, it offers a more flexible and hassle-free experience for policy buyers.
What is Bima-ASBA ?
Bima Applications Supported by Blocked Amount (Bima-ASBA) is a new facility that enables customers to authorize a block on a certain amount in their bank account for insurance premiums. The actual debit happens only after the insurer accepts the policy proposal. If the proposal is not accepted, the blocked amount is automatically released.
How It Works
Prospects can authorize insurers to block a certain amount in their bank account through UPI OTM.
The blocked funds remain untouched until the insurance policy is issued.
If the policy is approved, the premium amount is debited.
If the proposal is rejected, the funds are unblocked and released within one working day.
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Key Guidelines from IRDAI
Mandatory for insurers: All insurance companies must offer Bima-ASBA for life and health policies.
Optional for customers: Policy buyers are not obligated to use Bima-ASBA and can opt for other payment methods.
No extra charges: Insurers cannot levy additional fees for this facility.
Clear communication: Customers must be informed at every stage—blocking, debit initiation, and unblocking.
14-day validity: The blocked amount remains valid for a maximum of 14 days or until the underwriting decision is made.
Implementation and Next Steps
To ensure smooth execution, insurers must collaborate with multiple banks, set up proper systems and processes, and have the necessary contractual agreements. The Life and General Insurance Councils are required to finalize the standard declaration form for policyholders within one week of the circular’s issuance.
Bima-ASBA aims to enhance convenience and security for insurance premium payments , ensuring funds are available while reducing transaction failures. With no upfront debit, it offers a more flexible and hassle-free experience for policy buyers.
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