Mis-selling of a different kind

Do PMJJBY and PMSBY genuinely benefit people or are they merely statistical illusions?

- Tamal Bandyopadhyay

We are all aware of the phenomenon of mis-selling of insurance and mutual fund products at bank branches across India. Some banks are more aggressive in this respect than others. A few relationship managers are more target-driven than their peers. On social media, we often come across videos of bosses abusing branch bankers for missing targets.

This is, however, only one side of the story. There's another, where the sufferers are mostly poor people—those who form the bottom of the pyramid.

Two insurance products involved here are the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and the Pradhan Mantri Suraksha Bima Yojana (PMSBY). Most customers are not aware of what they are buying and why.

PMJJBY is a life insurance scheme that offers a one-year term life cover, renewable annually, with an assured sum of ₹2 lakh for death due to any reason. The coverage period is one year, renewable annually, and the premium is ₹436. Initially, it was ₹330 but was raised in June 2022.

PMSBY is a government-backed accident insurance scheme, which offers accidental death and disability cover to individuals aged between 18 and 70, at a premium of ₹20 per annum. It offers an assured sum of ₹2 lakh for accidental death, or total and irrecoverable loss of both eyes or hands/feet, and ₹1 lakh for partial disability.

Both PMJJBY and PMSBY have been in force for over a decade now. They were announced in the 2015 Union Budget by then Finance Minister Arun Jaitley and were launched by Prime Minister Narendra Modi on May 9, 2015, in Kolkata.

All savings bank account holders aged 18–50 are eligible for both. The premium is debited automatically from the subscribers' accounts. This is one of the contributing factors to the problem. More on this later.