(MENAFN- Live Mint)

NEW DELHI: The Centre may allow individuals to raise the insurance cover under the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY) from ₹2 lakh to up to ₹5 lakh by paying a higher premium, according to two people close to the discussions.

The plan is part of the government's broader push to make its flagship life and health insurance schemes more user-friendly, efficient, and effective. To this end, the Insurance Regulatory and Development Authority of India (Irdai) has even constituted a working group, said the first person.

Among the proposed measures to boost subscriptions are an option for individuals to pay premiums for at least three years upfront and expanding the distribution base through government financial inclusion channels, such as digital banking units (DBUs), the second person added.

With a cumulative subscriber base of over 750 million, the two schemes are among the government's largest insurance programmes. The PMJJBY offers a ₹2 lakh life cover for a premium of ₹436 per annum to individuals aged 18-50 years, and currently covers more than 250 million people. The PMSBY provides a ₹2 lakh accident cover for a premium of ₹20 per annum to individuals aged 18-70 years, reaching over 500 million subscribers.

Queries emailed to the finance ministry and Irdai remained unanswered until publication.

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The social-security framework

The government's decision to review the schemes is well placed, as they have brought unprecedented scale to the country's social-protection framework, said Rajiv Gupta, president of insurance marketplace PB Fintech.

"As the country moves towards broader financial security, these schemes must be updated to simplify processes, strengthen benefits, and improve the claims experience," he added.

But the restructuring must be done with a clear focus on simplicity, sustainability and better targeting, added Narendra Bharindwal, president of the industry body Insurance Brokers Association of India (IBAI).

"When these schemes were launched, the sum insured was meaningful. With inflation, rising healthcare and livelihood costs, a cover of ₹2 lakh is no longer adequate protection for a breadwinner's family. If we want these schemes to remain relevant over the next decade, they must be recalibrated," he said.

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Many subscribers drop out due to issues such as insufficient bank balances, auto-debit failures, or a lack of awareness about the need to renew insurance schemes. Bharindwal suggested simplifying onboarding and renewal-through better digital integration, consent management, and nudges-can improve persistency and ensure families are continuously protected.

"Also, the country's financial landscape has changed-UPI, Aadhaar, Jan Dhan, Central KYC, account aggregators, and deeper penetration of smartphones. The schemes should leverage this ecosystem so that access, servicing and claims become much smoother and faster," he added.

However, increasing the sum assured will raise premiums, possibly pricing out the most vulnerable unless supported by subsidies, tiered cover options, or continued government backing, said Narendra Ganpule, partner, business advisory services firm Grant Thornton Bharat.

“A tiered premium model, where the government subsidizes premiums for the bottom 40% of the population-using Socio Economic Caste Census (SECC) or Aadhaar-linked Direct Benefit Transfer-can ensure inclusivity without compromising budget discipline," he suggested, adding that the scheme must focus (only) on economically weaker sections of society instead of offering insurance at subsidized rates to those who can afford.

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"Also, the government should move towards a single, composite product (covering life, health, disability, and property) as envisioned in Irdai's 'Bima Vistar' initiative, simplifying policy management for low-income households," he said.

To be sure, India still has significant ground to cover in expanding insurance protection.

Government data shows that between 2014 and 2024, while the number of insurers increased from 53 to 70, insurance penetration rose marginally from 3.9% to 4%-compared with a global average of 7%-and insurance density nearly doubled from $52 to $92, yet far below the global average of $900.

According to IBAI estimates, only half of India's population has some form of life insurance, while just one in five individuals has health cover.
Prime Minister Narendra Modi launched the PMJJBY, the PMSBY, and the APY (Atal Pension Yojana) on 9 May 2015.

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