India: Insurers hope for a hike in premium for government life insurance scheme

| 08 Oct 2021

Insurers in India are looking for a hike in the premium for Pradhan Mantri Jeevan Jyoti Beema Yojana (PMJJBY, Prime Minister Life Insurance Scheme).

The insurers have proposed an annual premium of around INR400 ($5.4) as against $4.4 per annum that is being currently charged to over 105m persons enrolled in the scheme (on a cumulative basis) that was launched in 2015 by the Indian government.

The government had chosen to keep the premium rate low to enable more people to take life cover and get social security.

The PMJJBY scheme provides a life cover of INR2,00,000 to people in the age group of 18 to 50 years (life cover up to age 55) having a savings bank account. The scheme is available for one year, stretching from June 1 to May 31 and is renewable every year.

A report in the Indian financial daily Business Line said the insurers’ point is that the premium for the life insurance cover was fixed a long time ago and needs to be reviewed. Further, there has also been a rise in claims under the scheme following the COVID-19 pandemic. The scheme had registered 2,60,000 claims till May 2021.

A life insurance executive told Business Line, “It is very, very important that the premiums for the scheme increase. It has not been hiked even once since the scheme was launched. It is not sustainable at the moment.”

According to the report the government is also looking to bring more people under the scheme. The finance ministry had recently said it would try and bring the 430m eligible account holders of the Pradhan Mantri Jan Dhan Yojana under the PMJJBY and Pradhan Mantri Suraksha Bima Yojana. These are very low priced initiatives by the government of India to bring life insurance to more Indians at affordable premium.