No more confusion: Plain vanilla insurance products coming up

Public sector insurers have already begun work to introduce easy-to-understand, low-cost policies

If you are an insurance policy holder confused about jargon such as pure-term, non-linked, co-pay cover, et al, here's some good news. The insurance sector is working on simple, plain-vanilla products to cater to people like you.

In a recent meeting at Hyderabad between state-owned insurers, regulatory and finance ministry officials, the government has asked public sector insurers to launch products that are simple, cheap and something that a layman can understand. The insurers have already begun to work on them.

In the meeting, the insurers were also asked to make use of the network under the Pradhan Mantri Jan Dhan Yojana (PMJDY) to distribute the products. Confirming that New India Assurance has already begun work on devising simple and low-cost products, chairman and managing director G Srinivasan said: "We have filed some products with the regulator and are working with the other PSU (public sector unit) insurers to bring out products for the common man," he added.

According to industry players, they would utilise the Jan Dhan network to enhance the reach of their products. Also on the cards are co-branded products to meet the basic needs of life, health etc.

These products are to be sold in the category of micro-insurance as low-ticket products. Senior executives said that if required, they would also launch products for migrant labourers in metros, which will include an accident cover.

"Some products that are offered online, especially motor, are very simple in nature and cost-effective. This will be extended to other products so that customers who want cheap and basic products can make use of this medium or Common Services Centres in their area," said the general manager at a state-owned non-life insurer.

PMJDY was announced by Prime Minister Narendra Modi on August 15, 2014 and it was formally launched on August 28, 2014. The programme envisages access to banking services to all un-banked individuals in India. People who open accounts through this scheme will be provided with a RuPay debit card and Rs 1 lakh accident insurance cover. Those opening an account before January 26, 2015 will also be entitled to avail of a life insurance cover of Rs 30,000.

Initially, banks were given a target to open 75 million accounts under this programme by the middle of August 2015.

Later, the date was advanced to January 26, 2015, by Prime Minister Narendra Modi on the launch date (August 28) when banks opened about 15 million accounts.

Even this advanced target was met before time - in November 2014. According to the PMJDY website, as many as 125.86 million bank accounts have been opened as on February 2.