In the run-up to the high-stakes state assembly elections, the central government may more than double the amount covered under its flagship life and accident insurance schemes, according to two persons aware of the development.
The government proposes to offer a life cover of ₹5 lakh, up from the present limit of ₹2 lakh, under Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), the people said on the condition of anonymity. It is one of the largest life insurance programmes from the government, with more than 200 million subscribers.
The plan also involves increasing the cover to ₹5 lakh from the current ₹2 lakh under Pradhan Mantri Suraksha Bima Yojana (PMSBY) in case of death or disability caused by accident. As of 31 July, enrolments under the scheme stood at 453.6 million.
The push to increase coverage is part of the government’s "insurance for all by 2047” initiative. While the number of insurers rose from 53 to 70 in the past 10 years, India's insurance penetration—or percentage of premium to GDP—of 4% is still lower than the global average of 6.8%.
“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 ₹5 lakh cover under the schemes would help to bridge this protection gap substantially,” said the first of the two persons quoted above.
Queries emailed to ministry of finance and secretary, department of financial services remained unanswered till press time.
The officials cited earlier said discussions have already started to raise coverage under the two schemes. Individuals will have the option to either take the higher cover on paying increased premium or continue with the existing ₹2 lakh cover—at a premium of ₹20 per annum per member of a family for PMSBY, and ₹436 per annum per member for PMJJBY.
The premium payable under expanded schemes is yet to be worked out as the government would discuss it with public and private insurers and distribution platforms such as banks and post offices. But, the second person quoted earlier said, the effort would be to keep premiums low even with higher coverage to bring more people under insurance.
“More inclusive policies will contribute towards making insurance coverage more ubiquitous, in addition to addressing the growing and evolving needs of the nation,” said Rahul Singh, founder, InsurMonthly, a Bangalore-based health and wellness platform that widely distributes and services government-backed insurance products.
"Wider inclusions and improved coverage under PMJJBY and PMSBY will make these schemes more attractive and significantly help the uninitiated and underprivileged section of the society while helping mitigate the concerns of adequacy of coverage in the times of needs,” he said.
PMJJBY, PMSBY and APY (Atal Pension Yojana) were launched by Prime Minister Narendra Modi on 9 May, 2015. PMSBY is a one-year personal accident insurance scheme, renewable from year to year, offering protection against death or disability due to accident. The total amount payable in case of death in an accident is ₹2 lakh, while the payout in case of disability caused by an accident ranges from ₹1-2 lakh. The scheme is available for individuals between the age of 18 and 70 years with bank accounts and the premium for the scheme will be deducted from the savings account of the insured.
PMJJBY offers life cover for death of the insured. It is offered through Life Insurance Corporation of India Ltd and other life insurers and banks that are willing to offer the scheme on similar terms. Indian residents between the age of 18 and 50 years with a bank account are eligible for it.
