Mass schemes could be a boon for financially stressed families that had received a blow like illness or death of an earning member

Mass schemes could be a boon for financially stressed families that had received a blow like illness or death of an earning member

Last week I dropped in at our old home and Lakshmi, who irons clothes on our street, peeked in curiously to say hello.

A quiet service provider over decades, she and her family work with a heavy coal-fired iron box on a pushcart. She collects washed clothes and hand delivers them hot from the iron, with a cheery waft of wood-coal smoke.

She never fails to mention how my mother eased her life by getting her a cooking gas connection those many years ago, and how she went the extra step personally taking her to the bank branch to introduce her for an account, enabling her to get an address proof and so on for the gas connection.

We take it for granted, but with this, Lakshmi could cook for the family, pack off dabbas for her school-going children, and still do early rounds to pick up clothes before people left for work.

She pulled out her bank passbook proudly to show me her healthy balance through her meagre yet disciplined savings. Tucked into the cover was a little photo of my mother, as her quiet mark of regard.

In our previous column, we saw a profile of mass insurance scheme under the Jan Dhan Yojana and some details about one of them, an old-age pension scheme called the Atal Pension Yojana.

Knowing about these schemes helps us participate in those that we are eligible for and fits our profile.

Over and above that, it helps us give timely tips and advice to those around us who may not know or trust insurance and other formal financial schemes due to poor information. Our household help and service providers like Lakshmi, for example.

What we take for granted, let us endeavour to guide and help others to get it.

Mass schemes can be a blessing from heaven for financially stressed families that receive shocking blows like illness or death of an earning member. An accident or even an expected retirement from employment changes finances and everyday life, and these are contingencies insurance can protect against.

Another angle that would be of interest is how much awareness these scheme had created among the beneficiaries about the benefits of insurance and whether that is leading them to buy insurance independently. That is, if they are part of a mass hospitalisation scheme, do they graduate to buying hospitalisation insurance independently as they progress in life.

Let us take a look at another personal insurance scheme under the Pradhan Mantri Jan Dhan Yojana (PMJDY).

The life insurance scheme called Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) is a one-year, annually renewable term policy for ₹2 lakh sum assured and a premium, currently, of ₹436 per year regardless of age and sometimes requiring just self-declaration of good health.

Any individual with a bank account, from age 18 to 50 can join and stay insured till age 55 as the premium is directly debited each year from the bank account.

The bank is the master policyholder and all those who enrol are members/insureds under the policy.

This makes joining, renewal, administration and claims easy under the policy. There is a pretty simple form for joining the scheme which includes a bank mandate for auto debit of the premium on a specified date, usually June 1.

Members will be covered up to age 55. Coverage will also cease if there are no funds to cover the premium on the due date or if the account is closed. In both cases, coverage can be restarted afresh with a caveat that any death claim except accidental death will not be admissible for the first 45 days of coverage. This is a term insurance and death claims will be paid to the nominee and there will be no maturity value or survival benefit.

The scheme is offered by many life insurance companies who have opted to do so. For the customer, almost all banks offer entry into the scheme through a simple savings bank account. A customer can participate in the scheme only once through one of his bank accounts. There are provisions for joint account holders to each avail of the cover. Non-resident Indians too can become members with an Indian bank account. The claims will only be paid in Indian Rupee.

Such one-size-fits-all, easy-to-join schemes have the advantage of sweeping in large numbers of insureds who, otherwise, may find it difficult or cumbersome to independently buy insurance. The premium rates and formalities are way more favourable too.

The third personal insurance policy under the JDY umbrella is a personal accident insurance scheme called Pradhan Mantri Suraksha Bima Yojana (PMSBY). We will take a look at that in the next instalment along with the flagship Ayushman Bharat scheme.

(The writer is a business journalist specialising in insurance & corporate history)

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By Dipak

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