Home / Politics / Policy /  Life cover under Jan Dhan Yojana may not be applicable to all

New Delhi: The life insurance cover proposed under the Prime Minister’s ambitious Jan Dhan Yojana will not be extended to all those who have opened accounts under the scheme.

According to the contours of the life insurance scheme proposed by the finance ministry and circulated to banks, only those in the age group of 18-60 years will be able to get the life insurance cover from state-run Life Insurance Corp. of India (LIC) and it will be restricted to one person per household.

In addition, income taxpayers and those who have covers under other government-sponsored life insurance schemes such as the Aam Aadmi Bima Yojana will also not be eligible for the life insurance cover, said two bankers, who did not want to be identified.

The Narendra Modi government launched its financial inclusion mission on 28 August to provide every household with at least one bank account. The government also offered added benefits of a debit card along with a personal accident insurance cover of 1 lakh and life insurance cover of 30,000 to attract more people to open bank accounts under the scheme.

The government has so far opened more than 75 million accounts under the scheme, but ensuring that these are regularly used and do not become dormant remains one of the biggest challenges. The government plans to open more than 100 million accounts under the scheme by 26 January.

“The exclusions are reasonable and will ensure that only the needy get the life insurance coverage. There are instances where multiple accounts have been opened by a household under the scheme. There are also cases where people who already have bank accounts have again opened accounts," said an executive with one of the state-run banks, one of the two people cited earlier. “These exclusions will ensure that coverage is restricted."

The second banker said that although the exclusions are stringent and will leave out many account holders, they are logical.

“People in the age-group of 18-60 years have been assumed with the capacity to earn and, hence, they have been made eligible. Also, it has been assumed that those who have the ability to pay income tax can afford some social security of their own," he said.

The government has made a good beginning by providing an insurance cover to at least one member in a household, said economist S.L. Rao.

“So many people in India do not have any form of social security. The government should keep a tight lid in the beginning, but it can later expand it to at least two members per household," Rao said. “Even among poor families, both husband and wife go to work and their lives should be covered by insurance."

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