One of the most common pieces of financial advice that people get when they start earning is to get insurance. When it comes to life insurance, a term plan can be one of the first insurance products to add to your financial portfolio. It is a pure protection life cover plan that provides life coverage to the policyholder for the plan's duration. There are no maturity or survival benefits associated with a term plan.
Term insurance plans are typically more affordably priced than savings insurance policies. This fundamental insurance product is designed to provide peace of mind to you and financial security to your family members in your absence. Different insurers offer variations of the basic term plan. Among the government-backed term insurance schemes in India, the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) stands out for its affordability and accessibility.
What Is the PMJJBY Or Pradhanmantri Jeevan Jyoti Bima Yojana?
Launched by the Government of India in Budget 2015 and officially introduced on May 9, 2015, in Kolkata by Prime Minister Narendra Modi, the PMJJBY yojana aims to provide low-cost life insurance to underprivileged and low-income families. This government-backed scheme offers a fixed life cover of Rs. 2 lakhs at an annual premium of just Rs. 436.
The policy term runs from June 1 to May 31 every year and is renewable annually. It is a pure term insurance policy, meaning it only provides coverage in case of death and does not offer maturity benefits.
What Are the Features Offered by the Pradhanmantri Jeevan Jyoti Bima Yojana?
The Pradhanmantri Jeevan Jyoti Bima Yojana is an effective group term life insurance plan for underprivileged families in India. Here's a quick snapshot of the PMJJBY scheme details:
1. Annual Renewable Term Plan
The Pradhanmantri Jeevan Bima Yojana provides life cover for the term of one year at a time. The plan can be renewed annually by paying the premium.
2. Affordable Premium
The premium is Rs. 436 per year, including administrative costs for banks.
3. Fixed Sum Assured
Provides a life cover of Rs. 2 lakhs to the nominee upon the policyholder’s death.
4. Age Eligibility
The premium remains the same for all Pradhanmantri Jeevan Jyoti Bima Yojana is open to subscribers individuals between the ages of 18 and 50 years.
5. Waiting Period
Once you enrol in the PMJJY policy, your life cover begins 45 days postafter -enrolment. However, in case of the policyholder's death within these 45 days due to an accident, the Pradhanmantri Jeevan Bima Yojana will pay the sum assured to the nominees.
6. Easy Enrolment
The Pradhanmantri Jeevan Bima Yojana can be purchased via any of the partnering banks and private insurance providers in the country.
7. Auto-Debit
The policyholder must have a savings bank account as the premium for the Pradhanmantri Jeevan Bima Yojana is auto debited directly from the registered bank account.
8. Coverage
Until the age of 55, the plan can be renewed year-on-year till the policyholder attains the age of 55 years.
9. Discontinuation
The Pradhanmantri Jeevan Bima Yojana can be discontinued by not renewing it at the end of the policy year. One can also re-join the scheme at any time by submitting a health certificate and paying the policy premium.
10. Additional Coverage
One can also boost their coverage by opting for the PMSBY in addition toalong with the Pradhanmantri Jeevan Jyoti Bima Yojana for coverage in case of disability and accidental death.
What Are The Benefits Of The Pradhanmantri Jeevan Jyoti Bima Yojana?
The Pradhan Mantri Bima Yojana is a group term plan offering a host of necessary benefits to policyholders.
Life coverage
Like any other pure protection term plan, the Pradhanmantri Jeevan Bima Yojana provides life cover for the plan's duration. Suppose the policyholder were to die during the tenure of the plan. Then, the nominees listed in the policy would receive a death benefit of Rs. 2 lakhs.
Risk coverage
The Pradhan Mantri Bima Yojana offers risk cover for a year. The policy is easily renewed annually..
Tax benefits
With the Pradhanmantri Jeevan Jyoti Bima Yojana, you can earn tax benefits for the premiums paid under Section 80C of the Income Tax Act of India 1961. The death benefit proceeds are tax-free under this plan. However, the policyholder needs to submit form 15G & form 15H to avail of this tax benefit. If the policyholder does not submit this form, any insurance proceeds from the policy that exceed Rs. 1 lakh will be taxed at the rate of two percent.
How Do You Enrol In The Pradhanmantri Jeevan Jyoti Bima Yojana?
Applying for the PMJJBY online is simple and can be done via:
1. Net banking or mobile banking portals of participating banks.
2. Physical applications at bank branches.
3. Official websites of insurance companies offering PMJJBY.
The PMJJBY application form is available in multiple regional languages, including Hindi, Marathi, Tamil, Telugu, and Kannada. Policyholders who discontinue coverage can initiate enrolment to the PMJJY scheme again by submitting a fresh application and health declaration.
What Are The Eligibility Criteria For The Pradhanmantri Jeevan Bima Yojana?
- The minimum age at the time of entry into the policy is 18 years, while the maximum age at entry is limited to 50 years.
- The maximum life coverage age of the policy is 55 years.
- The Pradhan Mantri Bima Yojana is an annually renewable policy.
- A savings bank account is mandatory for the purpose of enrolment and operation of the Pradhanmantri Jeevan Jyoti Bima Yojana. The coverage period under the Pradhan Mantri Bima Yojana is one year, beginning from June 1 to May 31 of the following year.
- The sum assured offered as the death benefit is fixed at Rs. 2 lakhs under the PMJJBY.
One person is allowed to have only one PMJJBY policy, irrespective of how many separate bank accounts they may have.
Important Considerations
- A 45-day lien period applies, except in accidental death cases.
- Policy termination occurs if the bank account is closed or has insufficient funds for premium payment.
- Premiums are deducted annually between May 25 and May 31.
- Additional coverage can be availed through PMSBY for accident insurance.
- No maturity or surrender benefits are available, as it is a pure term plan.
Who Should Consider PMJJBY?
PMJJBY is an ideal option for:
- Low-income individuals who need basic life coverage.
- Self-employed individuals without employer-provided insurance.
- People with limited financial resources looking for a cost-effective insurance option.
- Those who may not qualify for private term insurance due to medical conditions.
How PMJJBY Compares to Private Term Insurance Plans
While PMJJBY is an affordable and accessible option, it may not be sufficient for those with higher financial responsibilities.
Private term insurance plans often offer:
- Higher sum assured options.
- Longer coverage periods beyond 55 years.
- Additional riders such as critical illness and accidental death benefits.
- Lump sum and monthly payout options for nominees.
The PMJJBY scheme is an excellent initiative to provide affordable life insurance to economically weaker sections of society. It offers peace of mind and financial stability, ensuring families are protected in case of unforeseen circumstances. However, for those who need higher coverage or longer protection, considering a comprehensive term insurance plan is advisable.
If you haven't enrolled yet, consider applying for PMJJBY today through your bank or insurance provider to secure your family's future.
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