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Government Life Insurance Schemes

TeamAckoMay 13, 2024

With a range of insurance schemes on offer, the Indian government is committed to providing financial security to its citizens, especially those who are on the lower side of the income spectrum. In this article, we will explore the various life insurance schemes offered by the government and how they can benefit you and your family. We will give you an overview of these government insurance schemes falling under the life insurance category either directly or indirectly.

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What is Public Life Insurance? 

Public Life Insurance entails schemes launched by the government for its citizens. The Indian government has implemented several government-funded life insurance schemes intended to improve coverage for specific population groups. Government life insurance schemes are state or central government-sponsored insurance plans that provide financial security to individuals and their families in the event of an unforeseen death. The Indian government has taken the initiative to introduce and endorse numerous life insurance plans due to the inadequate accessibility of life insurance in the country, particularly in rural areas. Governments typically offer life insurance schemes that provide a sizable sum assured at an affordable rate to ensure that all segments of society have access to life insurance. They provide peace of mind to individuals and their families, knowing that they are financially protected in the event of an unfortunate event.

Types of Government-backed life insurance schemes in India

Here’s an overview of different government-backed life insurance schemes in India. 

1. Janashree Bima Yojana (JBY)

Janashree Bima Yojana (JBY) was launched by the Government of India. The scheme provides life insurance coverage to people who are economically weaker and unable to pay for expensive insurance policies. The JBY scheme offers life insurance protection to individuals belonging to certain occupational groups and their families. These include rural and urban poor people living below the poverty line, landless labourers, street vendors, weavers, craftspersons, employed women, self-employed persons, and other economically weaker sections of society.

The scheme provides a sum assured of Rs. 30,000 in case of death due to natural causes and Rs. 75,000 in case of death due to accidental causes. The beneficiary will also be paid Rs. 75,000 in case of total permanent disability. And Rs. 37,500 if the policyholder loses an eye or limb in an accident. 

How to buy the policy

To buy a policy under JBY, please follow these steps.

  1. Contact any of the designated agencies who are registered under the scheme, such as Self Help Groups (SHGs) or Non-Governmental Organisations (NGOs).

  2. You will need to submit the required documents and pay the premiums, which are typically very low.

  3. Once your application is processed and approved, you will receive a policy document.

It's important to note that JBY is primarily meant for people in low-income sectors belonging to the 45 named occupational groups, including Handicraft Artisans, Handloom and Khadi Weavers, Lady Tailors, Carpenters, Auto Drivers and Salt Growers. This scheme was introduced in the year 2000 in association with Life Insurance Corporation.

2. Pradhan Mantri Jan Dhan Yojana (PMJDY) 

The Indian Government launched the Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme in 2014 to help people who don't have access to banking services. The main goal of the scheme is to provide these services to those who are underbanked or unbanked. Additionally, the scheme also offers life and accidental insurance to its account holders.

If an account holder passes away for any reason, they are eligible for life insurance coverage of Rs. 30,000. Moreover, those who opened their accounts between August 15, 2014, and January 31, 2015, are eligible for life insurance coverage of Rs. 1 lakh. Account holders who meet the criteria are also eligible for accidental insurance coverage of Rs. 1 lakh.

These insurance benefits come at no extra cost and provide financial security to the families of the account holders in case of unexpected events.

How to buy the policy

To avail of these benefits, follow these steps. 

  • Visit any bank branch or Business Correspondent (Bank Mitra) outlet.

  • Provide the necessary documents to open a PMJDY account. 

3. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

The Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) is a life insurance program initiated by the Indian government in 2015. Its goal is to provide reasonably priced life insurance coverage for all Indian citizens. The policy is renewable on an annual basis and provides a one-year term life insurance policy with coverage for death due to any reason.

The scheme covers eligible individuals between the ages of 18 and 50 for Rs. 2 lakhs in case of death due to any reason. The Life Insurance Corporation of India(LIC) and other life insurance companies have partnered up with banks to offer this scheme.

The annual premium for this policy is very affordable at just Rs. 330.How to buy the policyTo buy Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), follow these steps.

  • Visit any bank branch and fill out the application form.

  • Submit the necessary documents like the nominee's name, relation, age and Aadhaar number. 

There is also an option of availing this scheme through net banking facilities of the participating bank. The annual premium is debited from the account holder's bank account on or before 31st May every year.

4. Pradhan Mantri Suraksha Bima Yojana (PMSBY)

Pradhan Mantri Suraksha Bima Yojana offers accidental death and disability coverage to people in India. The scheme was introduced by the Indian government in 2015 to provide affordable insurance to the underprivileged and is administered by banks and insurance companies. The annual premium for PMSBY is Rs. 12 and is auto-debited from the policyholder's bank account. The coverage period is from 1 June to 31 May of the next year. The scheme aims to increase the number of insured people in India and has been received positively since its launch.The key criteria here is as follows.

  • People aged eighteen to seventy years 

  • People with a bank account

  • It's mandatory to link the Aadhaar card with the financial institution.

How to buy the policy

To purchase PMSBY, follow these steps.

  • Approach any participating bank or an insurance company and fill out the application form.

  • Submit the necessary documents, like the nominee's name, relation, age and Aadhaar number.

Explore ACKO Life Flexi Term Plan

If you're seeking a life insurance plan that offers both flexibility and comprehensive coverage, the ACKO Life Flexi Term Plan stands out as an excellent choice. This pure, non-linked term plan is designed to cater to your requirements. A range of customisable payout options, affordable premiums, and a streamlined claim process ensure peace of mind for you and your loved ones. 

Key Takeaways: 

Adaptable Sum Assured 

Flexible Policy Tenure

Affordable Premiums 

Will Creation Service 

Flexible Payout Options 

Easy Claim Process

How to Choose the Right Government Life Insurance Policy?

  1. Research about different government schemes: To research various government life insurance schemes available in India to decide which one aligns best with your needs and preferences.

  2. Understand your needs: Understanding your financial goals, dependents, and future needs is crucial in selecting the right government life insurance policy. Comparing rates and features can help you narrow down your options effectively.

  3. Choose affordable premiums: Evaluating the affordability of premiums is a significant factor. Ensure premiums fit within your budget for long-term financial planning.

  4. Understand the policy features: Assess the features of the policy, such as coverage options, benefits, etc., to ensure you choose the right one. 

So, you can compare and buy the best government life insurance plan by checking these details. 

Parameters Affecting Government Life Insurance Premium

The following are the parameters to consider when choosing a government policy:

  1. Age

  2. Lifestyle 

  3. Amount of Coverage

  4. Policy type

How can you claim against a Government Life Insurance Plan?

You can claim your government life insurance plan with these steps:

  1. Notifying the insurer and informing them about the demise of the policyholder

  2. Requesting and obtaining the claim forms

  3. Filling out the form and completing the claim 

  4. Collecting and submitting the required documents, including the policyholder's death certificate

  5. Verifying the claim and, after approval, following up in case of delays

How to Calculate Government Life Insurance Premiums 

You can calculate the government life insurance plan by following these steps:

  1. Determining the coverage amount

  2. Understanding the premiums 

  3. Calculating the premium using the rates and tables

  4. Making the payment through an authorised platform

Wrapping It Up

The Indian government has rolled out various state and central-sponsored life insurance schemes, each designed to safeguard the future of its citizens. Your ability to make a well-informed decision depends on familiarity with these options. Understanding the details of government life insurance plans is crucial before purchasing.

Frequently Asked Questions

Here’s a list of common questions and answers related to Government-backed life insurance schemes.

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Is it possible to purchase government insurance online? 

Yes, it’s possible to purchase a few government-backed insurance plans online. 

What is the sum insured in the case of government medical insurance plans? 

The sum insured varies based on the plan terms and coverage benefits. Thus, please check the sum insured individual for each plan.

Are there any limitations of government insurance plans? 

Generally, government insurance plans do not cover cosmetic procedures. Please consult the policy document for the covered medical schemes and other policy limitations before purchasing the policy. 

Who is eligible for these government life insurance schemes?

Eligibility criteria can vary depending on the specific scheme, but typically individuals between the ages of 18 and 50 are eligible to apply. Some schemes may have additional requirements related to income or employment status as well.

Are there any tax benefits associated with these government life insurance schemes?

Yes, premiums paid towards these schemes are eligible for tax deductions under Sec 80D, up to a certain limit. Additionally, benefits received from these schemes may be tax-exempt under Section 10(10D) of the Income Tax Act. However, it's always best to consult a tax professional for specific advice related to your personal situation.

Note: Tax benefits are only tax free under the old tax regime. Payouts above Rs. 5 lakhs are taxable under the new tax regime for policies bought after April 2023.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.

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