Pradhan Mantri Suraksha Bima Yojana (PMSBY)

Pradhan Mantri Suraksha Bima Yojana (PMSBY) – An accidental insurance scheme

The Pradhan Mantri of India Narendra Modi is all set to launch another flagship social security scheme: Pradhan Mantri Suraksha Bima Yojana (PMSBY) – An accidental Death and Disability insurance scheme.

A large part of the Indian population lives in rural areas and most of them are not covered under any kind of social security scheme. A large section of this population has not even gained the benefits of the banking system and most are still unaware of various governmental schemes that are launched from time to time.

To correct this serious anomaly in the lives of ordinary and poor people, the Pradhan Mantri of India is now all set to launch the PMSBY scheme in Kolkata on 9 May 2015, along with two other insurance- and pension-related schemes. Such is the seriousness of the government to make these schemes a success that almost the entire senior Cabinet has fanned out to various state capitals and major towns to simultaneously launch the scheme and ensure its successful implementation.

So what makes this scheme stand out from other social security schemes launched by the previous governments?

There are two aspects of Pradhan Mantri Suraksha Bima Yojana that make it different in offering and approach. Firstly, it is the sheer size and depth of inclusion to bring and get covered the maximum number of people under this scheme, which kind of makes it very ambitious and challenging.

Today, if an earning member of a family becomes permanently disabled or dies an accidental death, his or her family faces a life in penury and hardship, with no protection or support from any institution or group. By joining the Pradhan Mantri Suraksha Bima Yojana scheme and by paying a nominal premium of Rs. 12/- per person per year, he or she will get an insurance cover for a sum of Rs. 2,00,000/- (two lakh) in case of accidental death or permanent full disability or a sum of Rs. 1,00,000/- (one lakh) in case of partial but permanent disability. The scheme will be valid for a year and it can be renewed every year.

A lot of government social security schemes have not had a very positive response from people due to lack of financial system infrastructure at a nearby location and moreover, the paperwork involved in opening accounts or making claims was too much for them to handle. Even the leakages in the system resulted in large sections remaining excluded from the benefits of these schemes. This has now been largely addressed by the present government that has made extensive use of technology to augment its social scheme delivery and monitor mechanisms. All the payments will be directly credited to the beneficiary’s account with no scope for leakages.

Who is eligible to be covered under PMSBY?

Any person between the age of 18 and 70 with a savings bank account and Aadhaar Card can join the scheme.

A person will need to fill out a simple form, mentioning the name of the nominee and linking the Aadhaar Card to the bank account. The person will need to submit the form each year before 1st June to continue the scheme.

With this, the account can be easily activated and the entire premium due will be auto-debited from his or her account. In other words, all a person has to do is to open a bank account and then ensure the availability of at least Rs. 12/- before 1st June of each year to ensure automatic renewal of the scheme. A person has the option to go in for a long-term inclusion under the scheme by instructing the bank to auto-renew the scheme every year.

Who will implement the PMSBY?

All government-sponsored general insurance companies will offer the scheme, while other insurance companies will have the option to join the program delivery by signing-up with banks.

Will I get any tax benefits on joining the scheme?

The entire premium paid by the subscribers will be tax free under Section 80C. Furthermore, all the proceeds received up to Rs. 1,00,000/- (one lakh) will be tax exempt under Section 10(10D). For all the proceed amounts exceeding Rs. 1,00,000/-, a TDS at the rate of 2% of the total proceeds will apply if Form 15H or Form 15G is not submitted to the insuring agency.

So what made the present government kick start three major social security programs at one go?

The present government led by PM Narendra Modi is going to complete one year in office and has realized that their performance will come under close scrutiny for gap analysis between poll promises and actual deliverables after staying in power for one year.

The government has come under some criticism for not speeding up the government spending, especially in the much needed infrastructure and manufacturing sectors, both of which are tied to various pending bills in the Parliament, including the implementation of Goods and Service Tax (GST) and the vital Land Acquisition Bill. The government is, therefore, keen on not only announcing these social security schemes but also giving it the adequate push that it needs to ensure deeper penetration amongst various sections of people who really need them.

While it is true that the Jan-Dhan Yojana has achieved remarkable milestones in a short period of time in terms of the number of accounts opened, it is also equally true that a lot of these accounts remain with zero or minimal balance, thereby negating the very purpose for which they were opened in the first place.

The Pradhan Mantri Suraksha Bima Yojana scheme will take a year for it to be implemented across a wide section of people and next year around this time will be a good time to do a reality check on what was targeted and what had been achieved in terms of actual impact.

Meanwhile, the general mood remains buoyant and hopeful that PM Modi will come out considerably true on his promises of taking India on a path of accelerated development and that the Pradhan Mantri Suraksha Bima Yojana scheme will play its part in the overall success of the present government.

For further information on Pradhan Mantri Suraksha Bima Yojana (PMSBY) , You must have to login to: www.jansuraksha.gov.in or www.financialservices.gov.in. One can also call the National toll free numbers: 1800 110 001 / 1800 180 1111.

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