S Murlidharan May 30, 2016 11:33 IST
Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) has completed its first anniversary. It has indeed put life insurance on the nation’s consciousness with its hassle-free insurance procedure. No health certificate, no age bar except that the insured should be between 18 and 50 years of age at the time of taking of the policy. However, the policy can continue right up to the age of 55 if a start has been made at the right time, i.e. between the age of 18 and 50. The icing on the cake is the affordable premium of Rs 330 per annum for Rs 2 lakh for the first two years irrespective of the insured’s age, with freedom to the insurer to review it thereafter. So far so good.
A product’s or service’s success or usefulness is tested in a crunch situation. An insurance product is tested not on its purchase but at the time of an unfortunate incident, be it death or accident or damage to property. What is the feedback from the beneficiaries of the policies? Well, there are disconcerting anecdotal reports from the field backed up by TV news channel reports, with ZEE TV in particular, known for its pro-BJP stance, reporting poor delivery in the crunch situation.
The reports are the benighted beneficiaries especially in rural areas are either blissfully unaware of the policy left behind by the bank account holder or the banks not playing a sufficiently proactive role.
Indeed, banks are the lynchpin of the scheme, with the scheme being a follow-up action on Jan Dhan Yojana, the mass bank account opening initiative of the NDA II government at the center that has been a roaring success, finding a place in the fabled Guinness book of records. The life insurance policies have been sold by banks to their deposit holders on the basis of their Aadhaar registration.
Reports are that bank managers especially of banks with insurance subsidiaries who sold the policies with gusto to their account holders are not proactive enough in swinging into action on death of the policyholders. For this of course they alone are not to blame because in the IT-enabled ecosystem, the trigger should come from the system itself ideally. As it is, the beneficiary has to download the claim form or get it from the bank, fill it, attach a copy of the death certificate along with a cancelled cheque. The bank then forwards the application to the insurer who settles the claim.
The following can be done to ensure proper delivery in the unfortunate event of the insured’s death:
- The bank manager must supply the beneficiary with a copy of the insurance policy because in life insurance the insured is not alive to make a claim!
- Wide publicity should be given to the life after death aspect of PMJJBY in media, both electronic and print especially the vernacular
- Bank-insurer-hospital inter-face is a must. The hospital where the insured-patient is admitted must be mandated to collect the PMJJBY particulars so that it can intimate both the bank and the insurer in the unfortunate event of death.
While there are reports, albeit anecdotal, of benighted beneficiaries not getting the insurance amount either out of ignorance or inertia or both, there is an apprehension that public sector banks, the lynchpin of the scheme, may have to bear the brunt together with their insurance subsidiaries.
May be Rs 330 for Rs 2 lakh is just a teaser designed to hook people into the insurance habit, and the insurers may take a tougher call when the time comes for review after the second anniversary of the scheme in June 2017. But an insurer wins his spur on the back of claims: settlement ratio. While this figure for the first year is awaited, the story doing the rounds is many beneficiaries especially the financial illiterates are not bestirring in the first place to make the claim and the bank managers aren’t being very helpful. Private sector banks have wisely stayed away by and large.