Most people who abandon the idea of buying term insurance due to the excuse they will “not get any money back” are too attached to the numbers. Today, on the latest launched Government Social Security Schemes Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY), they are awakened about their financial security as both schemes are getting to appear as amazing, thanks to massive advisements and promos make people feel that if they don’t buy in them, they will miss an opportunity of a life time. The reason why this happening is because they are concentrating a lot on the price as they are offering at the extraordinary low premiums of Rs 12 per annum for accidental death and full disability Rs 2 Lakh and for partial disability Rs 1 Lakh and Rs 330 per annum for any natural death Rs 2 lakh. But they are not recognizing the fact that they are buying just peanuts on that price. They are rushing to their banks to get more details about all these schemes and exciting to get themselves enrolled to these schemes. We provide a transcript of both schemes so you can weigh your basic choices and you have to think the suitability for you. Also Read: Steps to Calculate Own Insurance requirement

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Pradhan Mantri Jeevan Jyoti Yojana

  • Details of the Scheme: The scheme will be a one year cover, renewable from year to year, offering life insurance cover for death due to any reason. The scheme would be offered / administered through LIC and other Life Insurance companies willing to offer the product on similar terms with necessary approvals and tie ups with Banks for this purpose. Participating banks will be free to engage any such life insurance company for implementing the scheme for their subscribers.
  • Scope of the Coverage: All savings bank account holders in the age 18 to 50 years in participating banks will be entitled to join. If the account is opened before attaining the age of 50 years, the life cover would remain intact up to the age of 55 years, if premium is paid regularly. In case of multiple saving bank accounts held by you in one or different banks, it is not allowed to get yourself enrolled with two or more than two different banks. In case the same is found to exist, your premium(s) will get forfeited and no claims would be paid. Aadhar would be the primary KYC for the bank account.
  • Benefits: The cover is subject to exclusions of the policy. PMJJBY will cover both natural and accidental death to up to Rs.2 lakh. On the death of the insured member for any reason, it is payable to the nominee. No claim is admissible for deaths during the first 45 days except for cases of death due to accident.
  • Annual Premium: The annual premium is fixed of Rs.330/- per member for all age groups for the first three years from June 1, 2015 to May 31, 2018, after which it will again be reviewed based on the insurers’ annual claims experience. The premium will be Rs.330 plus service tax per year for age group 18-50 years. As per ICICI Bank Ltd website, you have to pay service tax for both products. Service tax will be 14% of the premium amount.

Pradhan Mantri Suraksha Bima Yojana (PMSBY)

  • Details of Scheme: The scheme will be a one year cover, renewable from year to year, Accidental Insurance Scheme offering accidental death and disability cover for death or disability on account of an accident. The scheme would be offered / administered through Public Sector General Insurance Companies and other General Insurance companies willing to offer the product on similar terms with necessary approvals and tie ups with Banks for this purpose. Participating banks will be free to engage any such life insurance company for implementing the scheme for their subscribers.
  • Scope of the Coverage: All savings bank account holders in the age 18 to 70 years in participating banks will be entitled to join. In case of multiple saving bank accounts held by you in one or different banks, it is not allowed to get yourself enrolled with two or more than two different banks. In case the same is found to exist, your premium(s) will get forfeited and no claims would be paid. Aadhar would be the primary KYC for the bank account.
  • Benefits: PMSBY is an accidental death insurance cover. The sum assured is Rs.2 lakh for which you will have to pay a premium of Rs.12 plus service tax per year for the age group 18-70 years. Your nominee will get Rs.2 lakh, in case of accidental death, you will get Rs.2 lakh for total and irrecoverable loss of both eyes or loss of use of both hands or feet or loss of sight of one eye and loss of use of one hand or one foot. You will get Rs.1 lakh as claim amount in case of total and irrecoverable loss of sight of one eye or loss of use of one hand or one foot. The cover is subject to exclusions of the policy.
  • Premium: It costs you just Rs 12 per annum. The premium will be Rs.12 plus service tax per year for age group 18-70 years.
  • Tax Benefit: The premium paid will be tax-free under section 80C and also the proceeds amount will get tax-exemption u/s 10(10D).

Common Features

  • Enrolment Period: Initially on launch for the cover period 1st June 2015 to 31st May 2016, you will be required to enroll and give you auto-debit consent by 31st May 2015. Late enrollment for prospective cover will be possible up to 31st August 2015, which may be extended by Govt. of India for another three months, i.e. up to 30th of November, 2015. Those joining subsequently may be able to do so with payment of full annual premium for prospective cover, with submission of a self-certificate of good health in the prescribed proforma.
  • Enrolment Modality: The cover shall be for the one year period stretching from 1st June to 31st May for which option to join / pay by auto-debit from the designated savings bank account on the prescribed forms will be required to be given by 31st May of every year, with the exception as above for the initial year.
  • Payment Mode: The premium will be deducted from the account holder’s savings bank account through ‘auto debit’ facility in one installment, as per the option given, on or before 31st May of each annual coverage period under the scheme. If the premium is not paid on the time due to insufficient balance, the policy can be restored after paying the full amount together with the self-attested copy of good health.
  • Master Policy Holder: Participating Banks will be the Master policy holders. A simple and subscriber friendly administration & claim settlement process shall be finalized by respective LIC and other general insurance company in consultation with the participating bank.
  • Termination of assurance: The assurance on the life of the member shall terminate on either of attaining age 55 years, closure of account with the Bank or insufficiency of balance to keep the insurance in force or in case you are covered under PMJJBY with LIC of India / other company through more than one account and premium is received by LIC / other company inadvertently, insurance cover will be restricted to Rs. 2 Lakh and the premium shall be liable to be forfeited.

Other Points to Ponder

  • In case you have opted for both the schemes then the total insurance cover in the event of accidental death is Rs.4 lakhs.
  • In case you have opted for both the schemes and dies due to natural death then the total insurance cover would be of Rs.2 lakhs.
  • The scheme is liable to be discontinued prior to commencement of a new future renewal date if circumstances so require.
  • Government contribution towards this scheme will be decided separately each year. The contribution will come from the unclaimed money lying idle in various public welfare fund.
  • Like traditional insurance plan, no maturity benefit will be given after termination of assurance. It is totally pure term and no future benefit plan.
  • The premium would be reviewed based on the claims received and may be increased for you. However, the Government claims that barring unforeseen adverse claims, efforts would be made to ensure that there is no raise in premium if it is within 3 years.

Who should subscribe the schemes?

Since the 80% of our population is considerably uninsured, the schemes target and perfect for those people who have been working in unorganized sector and below poverty line or not earning more than Rs 3,000 in a month. They will get the sufficient insurance by paying a little premium. The people who are reading this post and earning decently, they need higher sum assured, should not subscribe these schemes. The subscriptions of these schemes can give you an illusory satisfaction of insurance which may not compensate you for not more than 12 months’ expenses, if you die today itself. Rather, you should choose the best online term plan with adequate cover which can fulfil all your future financial goals and meet the monthly expenses till than you were earning.  Also Read: Don’t buy Insurance, Buy Adequate Cover

Buying insurance is easy.  Buying adequate life insurance is not.

You can also read the review of Atal pension Yojana, launched with this scheme.

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Suresh Kumar Narula

SEBI Investment Advisor, Founder & Principal Financial Planner at Prudent Financial Planners
Suresh K Narula is founder and Principal Financial Planner at Prudent Financial Planners. He has earned the professional CERITIFIED FINANCIAL PLANNER and got registered with SEBI as Investment Advisor. He writes on personal and financial planning articles and got published in Dainik Bhaskar, Business Bhaskar and The Financial Planner's Guild, India. He is also a member of Financial Planner's Guild India ( An association of practicing SEBI registered Investment advisers) to create awareness about Financial Planning in general public, promote professional excellence and ensure high quality practice standards. Suresh received his an M.com from Himachal Pardesh University and an MFC from Punjab University, Chandigarh. He can be reached at info@prudentfp.in
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