After about 150 million bank accounts being opened under the Pradhan Mantri Jan Dhan Yojana, insurance and pension benefits will now be extended to the holders of these accounts through three schemes launched on Saturday. Through these Jan Suraksha schemes - one life, one non-life and one pension - pure term insurance and group personal accident covers will be extended to beneficiaries.
In his Budget 2015-16 speech, Finance Minister Arun Jaitley had said two new insurance schemes would be launched for lower-income groups. A Suraksha Bima Yojana, an accident insurance scheme with a sum assured of Rs 2 lakh and premium of only Rs 12 a year, would also be launched, he added. Also, a Jeevan Jyoti Bima Yojana, with a life insurance cover of Rs 2 lakh and annual premium of Rs 330, would be introduced for those aged 18-50. (LIFE COVER)
The Pradhan Mantri Suraksha Bima Yojana for accidental death insurance will be available to those aged 18-70, holding bank accounts (as the premium will be auto-debited from accounts). For this, the premium will be Rs 12 a year and the coverage will be Rs 2 lakh for accidental death and full disability, and Rs 1 lakh for partial disability.
Jaitley had said these schemes would account for a universal social security scheme. Added to this would be the Atal Pension Yojana, for which the government would make half the contribution. The Atal Pension Yojana will be for workers in the unorganised sector. Under the scheme, a guaranteed pension of at least Rs 1,000, Rs 2,000, Rs 3,000, Rs 4,000 and Rs 5,000 a month (depending on the contributions of subscribers) will be given upon attaining the age of 60.
With pricing kept very low, insurers and banks have maintained they won't be able to earn significant revenue from these schemes. "For banks, the charges paid are less than Rs 5. This does not even cover the service costs," said a senior banker who has partnered a large life insurer to offer the group term life scheme.
Also, this being a group term scheme, clarity is awaited on what will happen in case of excessive claims in a year, as well as the impact this will have on future premiums.
Insurers say unlike other policies, no health certificate or pre-existing disease information is required. The scheme will be offered by all public sector general insurance companies, as well as those willing to tie up with banks for this scheme.
Duplicity will be checked, as those enrolled in this scheme in a bank will not be eligible to participate in the same scheme with a different lender. Insurers said a common database would be maintained to ensure an individual didn't have more than one such cover.
The Pradhan Mantri Jeevan Jyoti Bima Yojana (for life insurance) will be available to those aged 18-50, holding bank accounts. Those enrolled in this scheme before the age of 50 may, however, continue to have the life cover up to the age of 55, subject to payment of premium. The premium will be Rs 330 a year, with a coverage of Rs 2 lakh in case of death due to any reason.
This scheme will be offered by the Life Insurance Corporation of India, as well as other insurers willing to tie up with banks for this purpose.
A participating bank will be responsible for recovering the annual premium from accountholders on or before the due date, through 'auto-debit', and transfer the amount to the insurance company.
For both the insurance schemes, one could choose auto-debit of full premium payment; also, one has to submit a self-certificate of good health. Those exiting the scheme may re-join it in the future by paying the annual premium and submitting a self declaration of good health.
In India, insurance penetration stands at only 3.9 per cent of gross domestic product and it is expected the new schemes will improve the situation. According to a study by Swiss Re, penetration in the life insurance segment stood at 3.1 per cent, while for non-life, it was 0.8 per cent, as of March 31, 2014.