Understanding Pradhan Mantri Jeevan Jyoti Bima Yojana: Premium, Value and Need

After starting your professional career, if there is one investment that you will not regret is getting yourself insured. When you are young, your risk as an insurance policyholder is relatively lower; hence, the premiums are also low. This allows you to get substantial medical coverage at an early age. Today, it is essential to have some medical coverage that provides you with the financial support you need to prevent and save you from breaking the bank in case you meet up with a medical emergency. 

This is precisely why the Indian government created the Pradhan Mantri Jeevan Jyoti Bima Yojana. The PMJJBY is an insurance scheme that provides the policyholder’s beneficiaries with death coverage of Rs. 200,000. The PMJJBY premium is as low as Rs. 436 per annum, as it is targeted at the masses. As per their direction, the PMJJBY premium is debited from the subscriber’s account on or before 31 May.

The PMJJBY premium is low, pocket friendly and curated to be such so that the masses can afford it. The idea is to allow more penetration of insurance as a product to hedge against crises rather than an investment. In non-technical language, insurance is not an investment vehicle but a tool that prevents you from facing dire financial expenses in times of crisis. 

Let us understand the PMJJBY Premium, its value and its need: 

PMJJBY is a pure insurance cover that offers only term/life insurance. The PMJJBY premium is yearly and needs to be renewed for it to be valid and active the following year. You can avail of PMJJBY through LIC or any other insurance service provider that matches this policy & meets the criteria. The premium for such a PMJJBY scheme should be paid to the eligible LIC and insurance service providers. 

The scheme is available to individuals between the ages of 18 to 50 years having a savings bank account. To avail of the benefits of this scheme, one has to have their AADHAAR card linked to their bank account. If the bank account user is a joint user, then all the users can join such a policy. This will then make the premium charge of PMJJBY premium to be charged for each person on an individual level. 

The value and the need for PMJJBY: 

The insurance industry has a low penetration in India as the knowledge about the product is very limited. Even with a PSU giant like LIC being in the play, a very handful number of Indians purchase insurance as a means of a hedge or even as an investment. 

The industry is set to grow at 11.4% in FY 23-24, which is higher than before. However, the overall penetration is as low as 3.2%, per 2021 reports. To democratise this & bring about change, the PMJJBY is an excellent beginning.