A term insurance cover is a must as it provides financial security to the family. If the bread-winner of the family dies a premature death, the family not only faces an emotional loss, it also incurs a financial one. While it is impossible to compensate the emotional loss suffered, the financial loss can be compensated through a term insurance plan. Keeping the importance of term insurance in mind, the Indian Government introduced the Pradhan Mantri Jeevan Jyoti Bima Yojana scheme which aims to provide affordable term insurance coverage to individuals. Here is a detailed analysis of the Pradhan Mantri Jeevan Jyoti Bima Yojana scheme –
What is the Pradhan Mantri Jeevan Jyoti Bima Yojana scheme?
The Pradhan Mantri Jeevan Jyoti Bima Yojana scheme is a one-year term insurance plan which covers the risk of death during the policy tenure. If the insured member dies during the one-year coverage period, the plan pays the death benefit.
Notable features of Pradhan Mantri Jeevan Jyoti Bima Yojana
- The Pradhan Mantri Jeevan Jyoti Bima Yojana was launched on 9th May, 2015 by the honourable Prime Minister, Mr. Narendra Modi.
- The coverage duration is one year. After a year it has to be renewed for continuous coverage.
- Coverage starts from 1st June and runs up to 31st May. Individuals can join the scheme after 1st June too but the coverage would end on 31st May after which they would have to renew it.
- Premiums are payable through auto-debit facility from the insured’s bank account. That is why policyholders are required to approve the auto-debit of the premium from their savings account if they want coverage. The approval should be done before 1st June so that the premium gets deducted on 1st June and they can enjoy a full year’s coverage.
- There is a waiting period of 45 days for death claims due to illnesses. This period starts from the coverage start date and deaths due to illness during this period would not be covered. However, in case of accidental deaths, there is no waiting period. Accidental death is covered from Day 1 of the policy.
- The coverage is arranged through the bank where the individual holds a savings account. The bank, in turn, arranges the insurance cover from any life insurance company of its choice. All life insurance companies offer coverage under the Pradhan Mantri Jeevan Jyoti Bima Yojana scheme.
Who can be covered under the scheme?
Any individual who fulfills the below-mentioned eligibility parameters can avail coverage under the scheme –
- The age of the individual should be at least 18 years. Moreover, the maximum age at which coverage can be bought is limited to 50 years.
- Coverage would continue till the insured reaches 55 years of age.
- A savings bank account is necessary from which the premium can be paid through auto-debit.
- Auto debit of the premium should have been approved by the individual for paying the premium under the scheme.
- All the individuals of a joint account can also apply for the scheme.
- If there are multiple bank accounts, coverage can be availed only from one account. The individual has the choice to pick the account from which coverage is required.
What is covered under the Pradhan Mantri Jeevan Jyoti Bima Yojana scheme?
Since it is a term plan, Pradhan Mantri Jeevan Jyoti Bima Yojana covers only death during the coverage tenure. The sum assured under the plan is INR 2 lakhs and it is paid if the insured dies during the coverage tenure.
How much premium is payable for the Pradhan Mantri Jeevan Jyoti Bima Yojana scheme?
The Pradhan Mantri Jeevan Jyoti Bima Yojana scheme is very affordable. Individuals would have to pay only INR 330 for availing the coverage of INR 2 lakhs. Since the insurance is arranged via a bank, the premium amount is divided as follows –
- INR 289 is paid to the insurance company as premium for covering death risk under Pradhan Mantri Jeevan Jyoti Bima Yojana.
- Since individuals apply to the scheme through the bank, the bank or its agent incurs expenses to insure the individual under the scheme. That is why INR 30 of the premium is reimbursed to the bank or the agent for enrolling individuals under the scheme.
- INR 11 is paid to the bank towards the expenses incurred by the bank in administering the coverage under the scheme.
Moreover, the premium amount of INR 330 does not attract any GST.
How to apply for the scheme?
- To apply for the scheme, individuals would have to request their banks in which they have their savings account.
- Almost every bank offers coverage for its account holders under the Pradhan Mantri Jeevan Jyoti Bima Yojana scheme.
- Banks enter into a tie-up with an insurance company to provide coverage for its account holders.
- Individuals pay the premium to the bank which, in turn, pays a part of the premium to the insurance company for the coverage.
- The application form for applying for the Pradhan Mantri Jeevan Jyoti Bima Yojana scheme is available with the bank. Alternatively, the form is also available on the Government’s website: janasuraksha.gov.in
Individuals would have to fill in the form for applying for coverage.
- The form is available in multiple languages and the individual can choose any language to fill the form.
- The form should be filled in stating the details required. Some common details which are required to be furnished in the application form include the following –
- Individual’s Aadhar Card number
- Individual’s Savings Bank Account Number
- Individual’s permanent residential address
- Permanent residential address of the guardian of the individual
- Individual’s mobile number
- Individual’s email id, etc.
- Moreover, the nominee’s name and details should also be provided by the insured since the nominee would be the one who would be receiving the claim in the absence of the insured.
- Once the form is filled with the necessary details, it should be submitted to the bank. The bank would verify the details in the form and approve the application. Once the application is approved, coverage would be granted to the individual.
- Rather than filling and submitting the form manually, banks, nowadays, allow individuals to fill and submit the application form through SMS or net banking facility. The process is quicker and more convenient.
- The individual should agree to the terms and conditions of the coverage.
- The last step in the application process is the consent of auto debit from the savings account so that premiums can be deducted when they are due.
Termination of coverage under Pradhan Mantri Jeevan Jyoti Bima Yojana
Termination of coverage is when the coverage is stopped by the bank or the insurance company. Termination of coverage is done on several grounds. These grounds are as follows –
- If the insured attains 55 years of age, coverage would not be renewed next year. As such, on the next policy anniversary, the coverage would be terminated.
- If the insured closes the bank account from which the coverage has been availed, the coverage would also be terminated. If any other account is available, the individual would have to re-enrol for the scheme from that account to avail coverage again.
- If the bank account has very low balance and the balance is not sufficient to pay the premiums of the scheme, the coverage would be terminated at the time of renewal.
- If the individual has multiple bank accounts and he/she has applied for the scheme from multiple accounts, the coverage availed under all accounts would be terminated as applying from multiple accounts is not allowed.
Making a claim under the Pradhan Mantri Jeevan Jyoti Bima Yojana scheme
A claim would occur when the insured individual dies. In that case, the nominee of the insured would have to make a death claim for receiving the sum assured. This claim should be made to the bank from where the insured had availed coverage. The claim process is as follows –
- Claim process for the nominee
- The nominee should fill up a claim form which is available with the bank. A discharge receipts is also required to be filled for availing the claim. The claim form and the discharge receipt can, alternatively, be downloaded from the website of the Government. The link is here. Besides the bank and the Government’s website, the forms are also available at the branches of the insurance company, hospital or insurance agent.
- The duly filled in claim form and discharge receipt should be submitted to the bank along with the death certificate of the insured.
- Copy of cancelled cheque of the bank account of the nominee or the bank account of the insured from where the scheme was availed would have to be submitted.
The bank arranges for the cover from an insurance company. So, after a claim is presented on the bank, the bank would have to take the following steps for getting the claim from the insurance company –
- Claim process adopted by the bank
- After the claim is made, the bank would check whether the policy, under which the claim has been submitted, was active as on the date of death of the insured or not. The cover would be considered active if the premium for the policy was paid before the insured had died and if the coverage was active and not terminated.
- Once the continuity of coverage has been established, the bank would verify the details of the nominee who is making the claim.
- After the details are verified, the bank would enter the details in the claim form wherein a section is left for the bank to fill.
- The claim form and the discharge certificate received by the bank are then forwarded to the insurance company along with the completed claim form, death certificate and the cancelled cheque copy.
- The bank is required to forward the claim to the insurance company within 30 days of being informed by the nominee.
Once the insurance company gets a claim from the bank, it also takes several steps to settle the claim. These steps are as follows –
- Claim process adopted by the insurance company
- Firstly, the insurance company checks whether the claim form has been completely and correctly filled or not. It also checks whether all the required documents have been submitted for claim processing or not.
- If there is any missing information in the claim form or if any document is not in order, the insurance company informs the bank of the same. The bank, then, asks the nominee to provide the missing information or to submit the correct document.
- If the claim form and the documents are in order, the insurance company would also check whether the coverage for the deceased was active as on the date of death or not. The company also checks whether the insured had availed coverage from one bank account or from multiple bank accounts. If the coverage is availed from multiple bank accounts, the claim would be rejected.
- If, however, the coverage was availed from one bank account only the company would pay the claim. The company would credit the claim amount to the bank account of the nominee directly.
- The insurance company would have to settle the claim within 30 days of receiving the claim from the bank.
- The nominee, instead of approaching the bank for a claim, can make a claim directly with the insurance company. If this happens, the insurance company would, first, check the validity of the claim with the bank from where coverage was availed. If the bank verifies the account of the insured and the validity of the coverage, the insurance company would pay the claim to the nominee.
The Pradhan Mantri Jeevan Jyoti Bima Yojana is open for all individuals. It can easily be applied by anyone holding a bank account. The coverage is decent and premiums are affordable. The scheme aims to provide individuals with the beneficial cover of term insurance and also to increase penetration of insurance in India. With such low premiums people are motivated to apply for the scheme and the scheme is growing at a good pace ever since it was launched.