Pradhan Mantri Jeevan Jyoti Bima Yojana Scheme

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Pradhan Mantri Jeevan Jyoti Bima Yojana Scheme

The Pradhan Mantri Jeevan Jyoti Bima Yojana is a life insurance scheme backed by the government that was introduced in 2015 to offer life insurance coverage to all Indian citizens.  The PMJJBY is a one-year term life insurance policy that needs to be renewed annually and can be offered through your life insurance provider or authorised banks.

If your life insurance provider has a tie-up with a bank, you can enable the auto-debit facility for the premium payment. It is important to note that all types of death, due to any reason, can be covered under this policy.

Being a term insurance plan, the PMJJBY offers a pure life insurance coverage of ₹2 lakhs. The affordability of the premiums ensures that every policyholder covered under the scheme should be able to receive the benefit of life insurance coverage for the lowest possible premium amount

Plan Benefits of the Pradhan Mantri Jeevan Jyoti Bima Yojana

  • Plan Benefits of the Pradhan Mantri Jeevan Jyoti Bima YojanaThe Pradhan Mantri Jeevan Jyoti Bima Yojana can offer the following benefits to you, the policyholder:save-tax-icon.svg
    • Life Cover
      PMJJBY offers pure life insurance coverage that secures your family’s financial future. By renewing the policy annually, you can be assured that they will enjoy continued life insurance protection.

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    • Financial Protection
      With a sum assured of ₹2 lakhs payable on the unfortunate death of the life assured, you can offer life insurance coverage to your family. This sum assured will be paid out to your beneficiaries and will take care of all their financial needs when you cannot provide for them.

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    • Tax Benefits
      Under Section 80C of the Income Tax Act, 1961, the annualised premium paid towards this term life insurance policy will be eligible for tax deductions. The death benefit will be exempt from taxation under Section 10(10D) of the Income Tax Act.

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    • Renewable Policy
      The term life insurance policy offers one-year insurance coverage with the choice of renewing it annually. Hence, you can determine the total policy term for as long as you keep renewing the plan yearly.
  • Eligibility Criteria
    • These are the following eligibility criteria to be fulfilled to enrol for the PMJJBY. You should:
      • Have a savings account in any participating bank that offers the scheme or a bank that is eligible to offer the scheme.
      • Only enrol in the scheme with one savings bank account, even if you have several bank accounts.
      • Be an accountholder between 18 – 50 years of age
      • Have your valid Aadhar card linked with the participating bank account.
      • Produce a medical certificate with self-attestation to declare that you are not suffering from any pre-existing critical illnesses.
    • The last eligibility criterion was not applicable for policyholders who joined the scheme during the initial enrolment period. Hence, those who availed of the PMJJBY between August 31, 2015, and November 30, 2015, were not required to produce any medical tests for the policy declaration.
  • What are the Documents Required to Enrol?
    • The following documents are necessary for enrolling in the PMJJBY:
      • A passport-size photo
      • Your valid Aadhar card
      • Your current mobile number
      • Your existing savings bank passbook
      • Proof of identity (as stated by the bank or your life insurance provider).
  • What is the Premium Amount to Avail of this Scheme?
    • The base premium to avail of the Pradhan Mantri Jeevan Jyoti Bima Yojana is ₹436 if the policy is purchased in the risk period’s first quarter. However, here is a break-up of the total premium amount that will be deducted with every annual renewal of the policy:
      • The insurance premium payable to your life insurance provider in the first quarter of the risk period will be ₹436, the annual expenses paid to the bank will be ₹30, and the annual administrative expenses will be ₹11.
      • The premium amount will be ₹342 if the policy is purchased in the second quarter of the risk period. Here, the annual expenses paid to the bank will be ₹22.50, and the annual administrative expenses will be ₹10.50.
      • The premium amount will be ₹228 if the policy is purchased in the third quarter of the risk period. The annual expenses paid to the bank will be ₹15, and the annual administrative expenses will be ₹7.
      • The premium amount will be ₹114 if the policy is purchased in the fourth quarter of the risk period. The annual expenses paid to the bank will be ₹7.50, and the annual administrative expenses will be ₹3.50.

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Term insurance should occupy the pole position in your insurance portfolio: Know why

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The primary objective of insurance is to protect your family members and dependents against financial insecurities in your absence, and hence should be the cornerstone of a sound financial plan. While your insurance portfolio may comprise of a number of products serving various life stage needs, it is term insurance that should really occupy the pole position.

Read on to know more about the benefits of term insurance

Provides substantial life cover at affordable premiums

Fiscal prudence calls for a large safety net that would help your family stay financially independent when you are no longer around. A term life insurance plan helps you achieve exactly that — you get a substantial life cover at a nominal premium.

A 30-year-old non-smoking male can avail a life cover of Rs. 1 crore – over a period of 30 years – by paying a nominal monthly premium of around Rs. 700 In case of death of the insured person within the policy term, his nominee would get the sum assured and with it, meet both present and future needs.

Stated simply, a term plan acts as a tool for income replacement for the family of the deceased. You can calculate the premiums applicable to you with the help of this calculator.

Helps your family pay off liabilities

Today, liabilities in the form of loans are a reality for most Indians during their working years to provide for important life goals such as owning a home or providing for children’s education. The onus of repaying the debt would fall on your family should an untoward incident arise. Simply put, the family then (spouse or child) would need to repay the loan in your absence. This can be a challenge especially if you have been the sole breadwinner in the family.

This is where a term insurance policy comes to your rescue. Proceeds from the term plan can help repay the loan, thereby allowing your family members to become debt-free. Debts can be a cause of major financial stress, something that can affect other goals. However, a term insurance plan in your portfolio provides the financial safety net for your family.

Keeps essential life goals on track

If you are the only earning member in your family, your sudden absence can derail other critical life goals such as your children’s higher education or marriage. However, a term plan helps keep these goals on track.

The death benefit received from a term plan can be used to address these goals that might otherwise get compromised in the absence of the family’s chief bread-earner. The death benefit received from a term insurance plan gives financial support to realize these life goals without anxiety and compromise.

Serves as a supplementary source of income

Without a steady source of income, it can be difficult to manage even the regular expenses – rent, utility, grocery bills, school fees. In the absence of the family’s principal earner, the inability to meet these expenses can potentially disrupt your family’s lifestyle. However, with a term insurance plan, things can move on uninterrupted.

Today, most plans offer the choice for pay-outs that can be either lump-sum or staggered. While with the former, the entire death benefit is paid at one go, the latter pays out monthly benefits over a period of time. One can choose to take part of the benefits as a lump sum and rest as a monthly income stream. While the monthly income can help meet regular expenses, the lump sum can either be used to pay off outstanding loans or be invested for long term goals. A monthly income stream instead of a lump sum helps the surviving family manage monies systematically. Taking out the entire benefit as a lump sum and then running regular expenses from the interest earned on the amount deposited in a bank is an alternative but only for the financially savvy. While all benefits (including monthly income) paid directly by the insurance company are tax-free, the interest earned from a bank deposit would be taxable.

The final word

As is evident, a term plan secures your family’s financial interests in your absence. It helps your dependents maintain their standard of living and address all essential goals when you are no longer around.

At the same time, you have complete peace of mind, knowing that people close to you would not have to deal with monetary hardships should an adverse circumstance crop up. Before buying a term insurance plan, you should ideally compare quotes from multiple insurers, probe into their respective Claim Settlement Ratios as well as available riders in order to make an informed choice

Note that the earlier you buy a term plan in your life, the better it is considering it would command a lower premium. With each year that you delay insurance purchase, the premium jumps up. It is expected that one is healthier when younger and hence chances are that insurers would deem you a safer prospect which means you do not pay additional premium owing to age-related health concerns

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