Since the target audience for these schemes is a low strata of the society, it is not advisable for those belonging to the middle class or upper middle class, whose life insurance needs are much more.
Prime Minister Narendra Modi announced three major social security schemes which would an an extension to Pradhan Mantri Jan-Dhan Yojana (PMJDY). These would be covered under the government’s Jan Suraksha initiative. The three major schemes are named as Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana and Atal Pension Yojana, let’s demystify the first two schemes in this post and understand better:
What are these schemes?
The Pradhan Mantri Jeevan Jyoti Bima Yojana will offer Rs 2 lakh cover in case of death of the policyholder. One has to pay Rs. 330/- as an annual premium. Bank account holders in the age 18 to 50 years are eligible to take this facility; the life risk cover will get terminated after 55 years.
The Pradhan Mantri Suraksha Bima Yojana will offer a renewable one-year accidental death cum disability cover of Rs 2 lakh at Rs. 12/- as an annual premium. The insured will get Rs 1 lakh in case of partial permanent disability.
Quick Snapshot of differnece between both the schemes
| FACTORS |
PMSBY |
PMJJBY |
| TYPE |
Life Insurance |
Accident Insurance |
| ELIGIBILTY |
18-70 years |
18-50 years |
| PREMIUM |
Rs 12/- per annum |
Rs 330/- per annum |
| DEATH COVER(NATURAL) |
NIL |
Rs 2 Lakh |
| COVER ENDS AT |
70 years |
55 years |
| DISABILITY OF ONE EYE OR ONE LIMB |
Rs 1 lakh |
NIL |
| |
|
|
Who it is aimed for?
The schemes target the poor and unorganized sector that are neither covered by any form of insurance nor get pension for support after any tragedy.
Salient features of both the schemes are as follows:
Pradhan Mantri Jeevan Jyoti Bima Yojana
Who is eligible to opt for these schemes?
A person in the age group of 18 to 50 and having a bank account is eligible to join the scheme before completing 50 years. He/she can, however, continue to have the risk of life cover up to the age of 55 years subject to payment of premium.
What is the Premium payable in this scheme?
Premium amount is fixed at Rs. 330/- per annum and the same will be auto-debited in one instalment.
What is the Payment Mode?
The payment of premium will be directly auto-debited by the bank from the subscribers account.
What is the Risk Coverage?
A sum of Rs. 2 Lakh will be provided to the nominee in the case of death of a policyholder.
What is the Term of this policy?
A person need to opt for this scheme every year and he/she can also prefer to give a long-term option of continuing like by giving confirmation for auto-debited every year by the bank.
Who will implement this Scheme?
It will be offered by LIC (Life Insurance Corporation) and all other life insurers who are willing to join the scheme and have tie ups with the Banks.
Pradhan Mantri Suraksha Bima Yojana
What is the Premium payable in this scheme?
Premium amount is fixed at Rs. 12/- per annum.
What is the Payment Mode?
The premium will be auto-debited by the bank from the subscribers account. This is the only mode available.
What is the Risk Coverage?
Risk coverage is divided in to two categories, one is for accidental death and full disability for which total Rs. 2 Lakh would be provided and the other one is for partial disability wherein the cover amount that would be provided is Rs 1 Lakh.
Who is eligible to opt for these schemes?
Any person having a bank account and Aadhaar number linked to the bank account can give a simple form to the bank every year before 1st of June in order to join the scheme.
What is the Term of this policy?
A person has to opt for the scheme every year. He can also prefer to give a long-term option of continuing in which case his account will be auto-debited every year by the bank.
Who will implement this Scheme?
These schemes will be managed by all Public Sector General Insurance Companies and by all the other insurers who are willing to join the scheme.
Common Question regarding schemes
Can one subscribe to both the schemes?
Yes, one can apply for both schemes. If one opts for Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and if death happens through natural or accident till subscriber is 55 years of age nominee will get Rs. 2 lakh. If one enrolls for Pradhan Mantri Suraksha Bima Yojana (PMSBY) and death happens due to accident then Rs. 2 lakhs will be provided.
Will this cover be in addition to cover under any other insurance scheme a person already has?
Yes, it is over and above any other policy a person already has covers that one can have but please note that this insurance cover for PBJJBY & PMSBY will be capped at 2 lakh only.
Can one get multiple insurance policies on having multiple bank accounts?
No, in case of multiple saving bank accounts held by an individual, the person would still be eligible to join the scheme through any one savings bank account only, it means one cannot enroll for more than one Pradhan PMJJBY or (PMSBY) policy.
Whether nominee has to pay further premiums in case of death of the policyholder?
No, the nominee need not pay the remaining premium, similar to other insurance policies.
Conclusion
Since the target audience for these schemes is a low strata of the society hence it is not advisable for middle class or upper middle class person whose life insurance needs are much more. Why I am mentioning this point is that when I visited my bank last week, I was offered a single page form for these schemes wherein I was just supposed to sign and everything will be taken care by then and my policies will be activated.
For the right financial planning, one need not buy anything which does not fit its plan, more importantly insurance plans which were always a pushed product and driven with high commissions. If you end up buy n no. of policies, your nominee to run from pillar to post to get the claims and justifying all the companies in the process. So choose insurance very carefully because the cover these policies provide seems to be too small if we consider the thumb rule of life and accidental insurance, which 10 times of annual income for life insurance and 5 times of annual income for accidental insurance .
Overall it is good for people who does not have any insurance and needs the most in its true sense. It will also help government to get some funds in the bank accounts which were opened under Jan Dhan Yojana but still lying without a single rupee. People opened those accounts thinking that government will deposit money in that account.
The most important part is the claim settlement, the basic purpose a person buy an insurance policy. These schemes might get business volumes because of a very low premium but such pricing will not be sustainable in the long run. Moreover, there is a serious doubt on settlement of claims & handling claims and other service related issues because of the assumption that there will be large volumes. Only some of the bank branches might be able to handle claims and not all any other branch can be approached for claiming the money. Good back end team needs to be appointed to handle these policies after its complete roll out and delivery.
To sum up, I would again like to highlight a very important fact that never think that Insurance companies are in the business to do Charity, it’s a business and business is always done to earn profit. So choose your insurance plan only after a due diligence and though insurance audit. Be smart, buy smart.
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