Personal Finance

Pradhan Mantri Insurance Scheme: DOES IT WORK FOR YOU?

Parvatha Vardhini C | Updated on January 24, 2018 Published on July 19, 2015

With life and accident covers of ₹2 lakh for nominal premiums of ₹330 and ₹12, respectively, the Pradhan Mantri insurance schemes have attracted subscribers in a big way. Parvatha Vardhini C finds out what people think about these schemes

Need for higher cover

Thirty-something Vighna Vinodh, a Project Manager with a leading multinational IT company in Bengaluru, has made a habit of looking up any new financial product that comes into the market. This helped her a few months ago to begin investing in the Sukanya Samriddhi scheme for her toddler daughter, Unnathi. The same enthusiasm has now made her sign up for the Pradhan Mantri Suraksha Bima Yojana, the accident insurance scheme. “I came to know about the scheme through newspapers and the SMS received from HDFC Bank, where I have a savings account”, says Vighna.

“I have two life insurance policies — a term insurance from SBI Life for about ₹50 lakh and another ULIP from LIC. I haven’t signed up for any accident riders in the term plan. So I thought it would be good to take an accident cover by subscribing to the Prime Minister’s scheme, considering the very minimal premium of ₹12”, she adds.

Vighna does not find the Jeevan Jyoti Bima Yojana (life insurance scheme) attractive enough, though. “Since the scheme is open to savings account holders from all walks of life and not restricted to only the no-frills account holders or unorganised workers, it would have been better if the government gave us the choice to opt for higher life covers if we were ready to pay a higher premium”, she reasons.

Accident cover is attractive

With term insurance cover worth ₹70 lakh from Aegon-Religare and another life cover for a similar amount as part of the group insurance scheme offered by his company, Saurabh Jain is quite comfortable with his existing life policies. But the Pradhan Mantri Suraksha Bima Yojana has found a taker in this alumnus of IIM Calcutta, working as CFO of a company in Coimbatore. “I did not take any accident riders for my personal policy. For the company’s group cover too, I am not very conversant with the policy’s features. So I thought I could sign up for the accident cover”, says Saurabh. “Though the benefits are not very high, against the nominal premium, it is definitely high”, he adds. But he is quick to dismiss the Atal Pension Yojana.

The maximum pension ₹5,000 a month several years later does not seem compelling enough. Secondly, Saurabh says that according to his calculations, the returns work out to a modest 6-8 per cent. He prefers saving through mutual funds for his retirement.

Easy sign-up procedure

Early in his work life, the only reason why Hyderabad-based Sudhansu Sahoo, a Ph D in Economics, signed up for an insurance policy was to save on taxes. As a result, he picked up high-cost traditional plans. But in recent times, he has become financially wiser. “After knowing that insurance was meant to cover risk and not earn returns, I took up a term plan for ₹1.5 crore recently.

So when I heard about the Pradhan Mantri Jeevan Jyoti Bima Yojana term plan, I signed up for it immediately. Although the cover is only ₹2 lakh, the premium is a minimal ₹330. So no harm in taking this as an additional cover, just for a back-up,” he says.

Thanks to his research bent, Sudhansu has read about these schemes in detail, which has helped him clear misconceptions among his colleagues and friends. “One of my friends was interested in signing up, but then he somehow assumed that it was only for poor people and that he was not eligible. I then told him that he was wrong and anyone above 18 years with a bank account was eligible”, he recounts. The possibility of signing up for the policy online was another reason that tempted him.

“I could get the policy by just signing into my net banking. Once you fill the form with your personal details, give the name of your nominee and pay the premium, the policy will be generated in your name in PDF format,” he explains.

“Given our busy schedules, it would have been difficult if we had to go to the branch and do the paper work.

Making the entire process online is hassle-free for the government too. Can it afford to send a person to everyone’s doorstep the way insurance companies do? ” he rightly asks.

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