Modi unveils insurance cover for poor in India

Modi unveils insurance cover for poor in India

K.T. Jagannathan

In what is considered as a significant initiative, the Indian government led by Narendra Modi has moved to create a social security net for the poor.

The initiative, announced on Friday, involves the provision of life and accident insurance cover to the poor.

The cover will be provided to all eligible Jan Dhan account-holders.

Jan Dhan Yojana is the flagship scheme of the National Democratic Alliance (NDA) led by the BJP. The scheme, which completed six years, was primarily launched to provide banking services to all households. Also, it has played a key role in the success of other welfare schemes, including direct benefit transfer (DBT), and disbursal of financial assistance during Covid-19.

To commemorate the completion of six years of Jan Dhan Yojana, the Indian government has decided to extend its two schemes - PM Jeevan Jyoti Bima Yojana (PMJJBY), a life insurance cover, and PM Surakhsha Bima Yojana (PMSBY), an accident insurance scheme - to eligible Jan Dhan account-holders. These government-backed insurance schemes were announced in 2015.

PMJJBY is available to people in the age group of 18 to 50 years having a bank account. The risk coverage under this scheme is for ₹2 lakh at a premium of ₹330 per annum in case of a death of the insured. PMBSY is available to people of 18-70 years. The risk coverage under the scheme is ₹2 lakh at a premium of ₹12 per annum for accidental death and full disability and ₹1 lakh for partial disability.

The government also plans to improve access of Jan Dhan Yojana account-holders to micro-credit and micro-investment such as flexi-recurring deposits, an official statement said.

As of August 19, there were more than 40.35 crore beneficiaries banked under the scheme, amounting to ₹1.31 lakh crore. Close to two-thirds of the accounts are from the rural area and 55% are held by women, as per official data.

According to the finance ministry, the average deposit per account is ₹3,239, which is an increase of over 2.5 times since August 2015. "Increase in the average deposit is another indication of increased usage of accounts and inculcation of savings habit among account-holders," the statement said.

According to the Reserve Bank of India guidelines, a Jan Dhan account is considered inoperative if there have been no customer-induced transactions in the account for over two years. As of August, 34.81 crores out of total of 40.35 crore accounts were operative.