Government Plans Major Boost to Insurance Schemes
The Central government is considering a significant enhancement to its flagship insurance programs by potentially increasing the coverage amount under both Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY) from the current ₹2 lakh to up to ₹5 lakh. This move would require subscribers to pay higher premiums but would substantially improve the financial protection offered by these mass insurance schemes.
According to sources familiar with the discussions, this initiative represents part of a broader government effort to make these life and accident insurance schemes more user-friendly, efficient, and effective for millions of Indians. The Insurance Regulatory and Development Authority of India (IRDAI) has already established a working group to examine these proposed changes and their implementation.
New Features to Boost Subscription Rates
The proposed overhaul includes several innovative features aimed at increasing subscription rates and improving customer convenience. One key proposal would allow individuals to pay premiums for at least three years in a single upfront payment, eliminating the need for annual renewals and reducing dropout rates due to auto-debit failures or insufficient bank balances.
Additionally, the government plans to expand the distribution network through various financial inclusion channels, particularly digital banking units (DBUs), to make these schemes more accessible to people across urban and rural areas. This digital push aligns with India's evolving financial landscape that now includes widespread UPI adoption, Aadhaar integration, Jan Dhan accounts, and increasing smartphone penetration.
The two schemes currently boast a massive cumulative subscriber base exceeding 750 million people, making them among the largest insurance programs administered by the Indian government. PMJJBY specifically provides life insurance coverage of ₹2 lakh for an annual premium of ₹436 to individuals aged between 18 and 50 years, currently protecting more than 250 million subscribers. Meanwhile, PMSBY offers accidental death and disability coverage of ₹2 lakh for just ₹20 per year to people aged 18 to 70 years, with over 500 million enrolled participants.
Expert Views on Scheme Modernization
Insurance industry experts have welcomed the government's decision to review and enhance these social security schemes. Rajiv Gupta, President of insurance marketplace PB Fintech, noted that these programs have brought unprecedented scale to India's social protection framework but require updates to remain relevant.
Narendra Bharindwal, President of the Insurance Brokers Association of India (IBAI), emphasized that the ₹2 lakh coverage amount that was meaningful when the schemes launched in 2015 has been significantly eroded by inflation and rising healthcare costs. "With inflation, rising healthcare and livelihood costs, a cover of ₹2 lakh is no longer adequate protection for a breadwinner's family," Bharindwal stated, adding that recalibration is essential for these schemes to remain effective over the next decade.
However, experts also caution that simply increasing coverage amounts and corresponding premiums could potentially price out the most vulnerable sections of society. Narendra Ganpule, Partner at business advisory firm Grant Thornton Bharat, suggested implementing a tiered premium model where the government subsidizes premiums for the bottom 40% of the population using Socio Economic Caste Census data or Aadhaar-linked Direct Benefit Transfer systems.
Ganpule also proposed moving toward a single composite product covering life, health, disability, and property risks as envisioned in IRDAI's 'Bima Vistar' initiative, which would simplify policy management for low-income households.
Addressing Insurance Gaps in India
The proposed enhancements come at a crucial time when India still faces significant gaps in insurance coverage. Government data reveals that between 2014 and 2024, insurance penetration increased only marginally from 3.9% to 4%, far below the global average of 7%. Similarly, insurance density nearly doubled from $52 to $92 during this period but remains substantially lower than the global average of $900.
According to IBAI estimates, only half of India's population has some form of life insurance coverage, while a mere 20% of individuals possess health insurance protection. The high dropout rates from current insurance schemes due to auto-debit failures, lack of renewal awareness, and insufficient bank balances further compound these coverage gaps.
The proposed changes to PMJJBY and PMSBY, launched by Prime Minister Narendra Modi on May 9, 2015, along with the Atal Pension Yojana, aim to address these challenges through better digital integration, simplified onboarding processes, improved consent management, and timely renewal reminders to ensure continuous protection for Indian families.
