5 Facts about PRADHAN MANTRI JEEVAN JYOTI BIMA YOJANA which are not being Told
Ever since Modi led BJP Government at Centre started advertising its PRADHAN MANTRI JEEVAN JYOTI BIMA YOJANA, BJP spokespersons are giving incorrect information on various TV news channels. There’s no exceptions here, all BJP spokespersons are hiding facts and giving incorrect information to the Nation. This is being done by telling blatant lies or by hiding the facts behind the veils of lack of information. Only question being: Is it possible for a spokesperson, participating in a debate on PRADHAN MANTRI JEEVAN JYOTI BIMA YOJANA, not to have information on the Rules of the Scheme.
Hence lets see what the Facts are (Source : Government of India website Here)
1. LIC or Life Insurance Corporation is NOT the sole Insurance Provider
BJP Spokespersons are saying that only Government owned LIC will administer the PMJJBY.
Wrong. The Official document says :
The scheme would be offered / administered through LIC and other Life Insurance companies willing to offer the product on similar terms with necessary approvals and tie ups with Banks for this purpose. Participating banks will be free to engage any such life insurance company for implementing the scheme for their subscribers.
Hence the argument that the scheme is aimed at Private Insurance Companies benefit from the Scheme, is valid.
If anyone is still in any doubts, then these make them fade:
Participating Banks will be the Master policy holders. A simple and subscriber friendly administration & claim settlement process shall be finalized by LIC / other insurance company in consultation with the participating bank.
Participating banks will be free to engage any such life insurance company for implementing the scheme for their subscribers.
The scheme, subject to the above, will be administered by the LIC P&GS Units / other insurance company setups.
2. Premium can increase in Future
The BJP spokespersons are saying the premium of Rs. 330 will not be increased.
The official document says something else:
However, barring unforeseen adverse outcomes of extreme nature, efforts would be made to ensure that there is no upward revision of premium in the first three years.
The experience of the scheme will be monitored on yearly basis for re-calibration etc., as may be necessary.
What “unforeseen adverse outcomes of extreme nature” and “scheme will be monitored on yearly basis for re-calibration etc.” mean?
This simply means that if the insurance companies have to pay lakhs of people due to some natural calamity or if the insurance companies say that it’s not possible to provide cover at that premium, then they can increase the premium.
3. The Insurance Scheme can be Discontinued
This line in the official document points to this fact:
The scheme is liable to be discontinued prior to commencement of a new future renewal date if circumstances so require.
4. No Contribution of the Central Government
When a Government starts such Schemes, it makes money contribution to the scheme. You will not find even a single Scheme from past Governments where the Government didn’t contribute 50 percent of more to the coffer. In this PMJJBY there’s NO contribution of the Modi Government. This is surprising, when the scheme is being advertised as PM Modi doling out financial security to the citizens.
This is the appropriation or distribution of the premium paid by YOU.
Appropriation of Rs.330/- per annum per member Premium:
Rs. 289 + Rs. 30 + Rs. 11 = Rs 330
- Insurance Premium to LIC / insurance company : Rs.289/- per annum per member
- Reimbursement of Expenses to BC/Micro/Corporate/Agent : Rs.30/- per annum per member
- Reimbursement of Administrative expenses to participating Bank: Rs.11/- per annum per member
5. Money once paid will be forfeited
In case a member is covered under PMJJBY with LIC of India / other company through more than one account and premium is received by LIC / other company inadvertently, insurance cover will be restricted to Rs. 2 Lakh and the premium shall be liable to be forfeited.
What if someone does this due to lack of information.
6. No Money will be paid at Maturity
When a person buys a Life insurance, he/she gets two benefits:
a) assurance on the life (an amount on the event of death) and;
b) the amount paid till the maturity of the scheme in the form of annual premiums + Bonus (called non-claim bonus). This way an insurance is also an investment instrument.
For instance If I pay 1000 Rs. annually for 10 years for a Life Insurance Policy. And if I don’t die within this period then after the policy period I will get 1000 x 10 + non-claim bonus. Thus I’ll get an amount Rs. 14000 or more. Why, as I paid Rs 10,000 every year to the insurance company.
The Pradhan Mantri Jeevan Jyoti Bima Yojana is paying YOU nothing.
As per the Termination of assurance on the life section in the official document:
The Policy will terminate on any of the following events and no benefit will become payable there under:
- On attaining age 55 years (age near birth day) subject to annual renewal up to that date (entry, however, will not be possible beyond the age of 50 years).
This means if a person survives till the age of 55, he will get NOTHING.
Take for instance, a person started paying premium at age 18 and paid all annual premiums till age 50. By then He would have paid the Insurance Company 33 annual premiums. Thus he would have paid the Insurance company Rs. 330 x 33 = Rs 10890
And he/she will get nothing.
- Closure of account with the Bank or insufficiency of balance to keep the insurance in force.
This way a big percentage of the scheme holders will see their policies closed. And what about the money they had paid before the closure? That will be forfeited by the Insurance Company.
This is usually not the case of Life Insurance schemes. You can pay pending premiums and continue the scheme. Although, here as well, if the insurance cover is ceased due to any technical reasons such as insufficient balance on due date or due to any administrative issues, the same can be reinstated on receipt of full annual premium and a satisfactory statement of good health. But still, the manner in which the Modi Government is spending crores of Rupees to advertise the scheme, it’s very likely that a large section of students, daily wage earners, poor, housewives will opt for the Scheme and after the initial one or two premiums, the Insurance will become inactive. Why, as there will be no money in the account. This is not over reasoning. If you’re a student and hold a bank account, tell me how much money on an average remains in that account.
Experts are of the opinion that 7 out every 10 bank accounts opened under Pradhan Mantri Jan Dhan account have no money in them. Experts believe that people opened these accounts either due to excessive advertising from the Government or by believing in the promise that a substantial money will be deposited by the Government in these bank accounts (the Black Money which will be brought back) .
Whatever be the reason. If 70 percent of the bank accounts linked to PMJJBY become dormant, imagine the amount of money Insurance Companies will make.
You can disagree with me, but Pradhan Mantri Jeevan Jyoti Bima Yojana doesn’t look a good scheme to invest in. The reason is simple, there are better schemes in the market, which are aimed at benefitting the policyholder. The Pradhan Mantri Jeevan Jyoti Bima Yojana appears to be created keeping in mind the Insurance companies only.
You have to understand Insurance business, in order to understand Insurance risk cover.
Put simply, you must not see Pradhan Mantri Jeevan Jyoti Bima Yojana as offering you ‘2 Lakh Life cover for just Rs 330 a year’.
That apart, note that when an insurance company gets the premium from a certain number of people, it covers the risk of one policy holder. For instance, when an insurance company takes premium from 10 people, it covers risk of one person. Lets do the calculation here. Say ten 18 year olds pay premium up to 55 years. The Insurance company gets Rs 3300 from these 10 people the first year, Rs 6600 the second year, and so on. Five years before the last premium paid by these 10 people, the insurance company will have Rs. 90,900. If one assumes that money doubles in 5 years, then by the time the last premium is paid, the insurance company already has Rs. 1,81,800. Thus in simple, with each passing year, the money cofer from these 10 people will increase; that apart the insurance company will get zero percent money, which can invest at any place to make more money. As keeping in view the life expectancy of above 65 years in India; and claims if any pertaining to road accidents [ According to 2013 Data, 1,40,000 people died in road accidents in India in 2013] , the scheme will enable insurance companies collect large money. The deaths due to other reasons increase after 55 years , and the Life cover ends at 55 years itself. Hence “Insurance Scheme offering life insurance cover for death due to any reason” is misleading.
The argument that LIC’s money is used for people’s welfare doesn’t fully apply here, as there are other insurance companies allowed in Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) as well. These companies will work for enriching themselves.
Ideally, Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY):
1. would have given 2 Lakh Insurance cover for FREE. No money to be paid by the people. The scheme would have the same rules, i.e. open to 18-55 years and death due to any reason. It would have costed the Government only Rs 3000 crore.
2. If the Government wants people to pay for the Life cover, then it should pay back the money paid by the person on completion of the policy + non-claim bonus.
at this moment, the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) appears to be Business Centric. In addition, it appears another attempt by the Government to take credit for no contribution.
If you still want to apply for Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY). then here are the key details :
The Scheme needs to be renewed Every Year: The scheme will be a one year cover, renewable from year to year, Insurance Scheme offering life insurance cover for death due to any reason. The person would be eligible to join the scheme through one savings bank account only. Aadhar would be the primary KYC for the bank account.
a) The savings bank account holders of the participating banks aged between 18 years (completed) and 50 years (age nearer birthday) who give their consent to join / enable auto-debit, as per the above modality, will be enrolled into the scheme.
b) Individuals who join after the initial enrollment period extending up to 31st August 2015 or 30th November 2015, as the case may be, will be required to give a self-certification of good health and that he / she does not suffer from any of the critical illnesses as mentioned in the applicable Consent cum Declaration form as on date of enrollment or earlier.