Personal finance decisions are based on your knowledge of needs and the intricacies of available solutions.
This enables you to carry out personal social responsibilities as well. You should guide, and even convince, your household staff, support staff at office, or anyone at all who is economically fragile, to secure their family financially.
Mass insurance schemes present attractive advantages to such people. The coverage is very standardised, premiums low and joining, very easy. Your talking to them about it will help immensely since they trust you and look up to you.
Three such schemes administered through a simple savings bank account are: Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) which provides ₹2 lakh in life insurance cover, Pradhan Mantri Suraksha Bima Yojana (PMSBY) which provides a cover of up to ₹2 lakh in case of accidental death and disability and Atal Pension Yojana (APY) which offers ₹1,000 to ₹5,000 as monthly pension on attaining the age of 60.
Taking the cover is as simple as walking into your bank branch and filling a one-page form with virtually nothing more than your account number and signature. For those with access to Internet banking, this process can be done online at the click of the mouse.
Tie-up with insurers
Different banks have tied up with different insurance companies and your only point of contact is your own bank.
The policy year is standardised as June 1 each year to May 31 the next year and the renewal premium is auto-debited in end May. The bank works with the insurance company for everything, including claims settlement.
And the premiums? PMJJBY offers the ₹2 lakh life cover for ₹330 per year. PMSBY’s ₹2 lakh cover costs just ₹12 per year.
Members can join APY from age 18 to age 40. On attaining age 60, you can get a monthly pension of ₹1,000 for a monthly contribution of ₹42 if you join the scheme at age 18. This contribution will be ₹291 per month if you join at 40. For a pension of ₹5,000 the same members would have to contribute ₹210 and ₹1,454.
The pension under APY is guaranteed by the Government of India which also co-contributes (for five years) 50% of the subscriber’s contribution or ₹1,000 per year, whichever is lower for those who are not covered by any statutory social security schemes and are not income taxpayers.
Members can join PMJJBY from age 18 to 50 and the coverage is until 55 years. The renewal premiums have to be auto-debited without fail for the policy to stay in force. The risk cover will commence only after completion of 45 days from the scheme enrolment date except death due to accident.
As for the PMSBY, members can join from age 18 to 70 and the coverage is through the same period. The death benefit on this policy is ₹2 lakh. In the case of total disability such as the loss of both hands or eyes, the insurance cover is up to ₹2 lakh and in case of partial disability such as the loss of one limb or eyes, the cover is ₹1 lakh.
All bank account holders can join these schemes and the premium will be auto-debited. The schemes will terminate if there is insufficient balance on the date the premium has to be debited which is in late May of each year.
It’s that easy and it is literally insurance without tears. Take a little time and convince those who make your life comfortable. Offer to foot their premiums if you can. It is not much, but the benefit to them is immeasurable.
( The writer is a business journalist specialising in insurance & corporate history )
