Govt looks to increase insurance cover under PMJJBY, PMSBY to Rs 5 lakh

Centre may increase cover from the current Rs 2 lakh to Rs 5 lakh under its flagship insurance schemes ahead of the high-stakes assembly elections in three states

The central government is planning to increase the amount covered under two of its flagship insurance schemes -- Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY).

According to a Livemint report, the Centre may increase cover from the current Rs 2 lakh to Rs 5 lakh under both the schemes in the run-up to the high-stakes state Assembly elections in Maharashtra, Haryana, and Jammu and Kashmir.

“The changes are being considered with a view to address the issue of protection gap in the insurance cover. Higher coverage will provide the requisite amount required by an insured or a dependent in meeting the financial obligations. The thinking is that a Rs 5 lakh cover under the schemes would help to bridge this protection gap substantially," a person aware of the proposed development told Livemint.

Currently, PMJJBY has more than 200 million subscribers while the enrolments under the PMSBY scheme stand at 453.6 million. The push to increase coverage is part of the government’s "insurance for all by 2047" initiative. This is especially significant as India's insurance penetration — or percentage of premium to GDP — of 4 per cent is still lower than the global average of 6.8 per cent.

Following the proposed increase in insurance cover, individuals will have the option to either take the higher cover on paying an increased premium or continue with the existing Rs 2 lakh cover — at a premium of Rs 20 per annum per member of a family for PMSBY, and Rs 436 per annum per member for PMJJBY.

So far, the Ministry of Finance has not issued any statement in this regard.

Centre-run insurance schemes

In May 2015, Prime Minister Narendra Modi launched three schemes -- PMJJBY, PMSBY, and Atal Pension Yojana.

PMSBY is a one-year personal accident insurance scheme. It is renewable from year to year, offering protection against death or disability in the case of an accident. The total amount payable in case of death in an accident is Rs 2 lakh, while the payout in case of disability caused by an accident ranges from Rs 1-2 lakh. PMSBY is available for individuals between the ages of 18 and 70 years with bank accounts. Premiums for the scheme will be deducted from the savings account of the insured.

Meanwhile, PMJJBY offers life cover in the case of the death of the insured. It is offered through the Life Insurance Corporation of India (LIC) and other life insurers and banks that are willing to offer the scheme on similar terms. Indian residents between the ages of 18 and 50 years with a bank account can avail of the scheme.