Q. Select any one Group Insurance Scheme and discuss the various features of the scheme in detail. Also discuss how the scheme is playing a decisive role in preventing and reducing poverty, inequality, social exclusion and financial vulnerability amongst the economically weaker sections of the society.
Outline:
1.
Introduction
to Group Insurance Schemes
2.
Selection
of Group Insurance Scheme: Pradhan Mantri Suraksha Bima Yojana (PMSBY)
3.
Features
of Pradhan Mantri Suraksha Bima Yojana (PMSBY)
o Eligibility
o Coverage
o Premium
o Claim Process
o Benefits
4.
Role
of PMSBY in Preventing and Reducing Poverty, Inequality, Social Exclusion, and
Financial Vulnerability
o Poverty
Alleviation
o Reducing
Inequality
o Combating Social
Exclusion
o Financial
Vulnerability Mitigation
5.
Conclusion
1.
Introduction to Group Insurance Schemes
Group insurance
schemes are policies that provide insurance coverage to a large group of
individuals, typically through their employer, trade union, or a professional
organization. These schemes are designed to offer protection to members of a
collective group at a more affordable premium compared to individual insurance
policies. The primary objective is to provide financial security to individuals
who may otherwise not have access to adequate insurance coverage due to their
low income, lack of awareness, or limited resources.
In India, several
government and private sector schemes have been implemented to improve the
financial security of economically weaker sections of society, particularly in
rural and underdeveloped areas. One such prominent scheme is the Pradhan
Mantri Suraksha Bima Yojana (PMSBY), a government-backed accident
insurance policy aimed at providing financial protection to vulnerable
populations.
2. Selection
of Group Insurance Scheme: Pradhan Mantri Suraksha Bima Yojana (PMSBY)
The Pradhan
Mantri Suraksha Bima Yojana (PMSBY) is a significant group insurance
scheme launched by the Government of India on May 9, 2015. The primary objective
of this scheme is to provide affordable accident insurance coverage to
individuals belonging to economically weaker sections of society, particularly
those who are at risk of financial vulnerability due to accidents.
It is one of the
flagship schemes under the government’s broader vision of financial inclusion.
The PMSBY is part of a series of insurance schemes introduced by the government
to address the needs of the marginalized, improve financial security, and
mitigate risks in a low-cost manner. It provides a safety net to the
underprivileged, especially those in rural areas and informal sectors, where
insurance penetration is often minimal.
3. Features of
Pradhan Mantri Suraksha Bima Yojana (PMSBY)
Eligibility
PMSBY is open to
all Indian citizens between the ages of 18 and 70 years who have a savings bank
account. The individual must also provide consent to join the scheme and give
authorization for the premium to be deducted from their bank account. The scheme
is available to people from both rural and urban areas, and it aims to ensure
that those from economically weaker backgrounds can avail of the benefits.
Coverage
Under PMSBY, the
coverage is primarily for accidental death and disability. It provides the
following:
- Accidental Death
Benefit:
In case of death due to an accident, the nominee receives a sum of ₹2
lakh.
- Permanent Total
Disability Benefit: If a person suffers permanent
disability due to an accident, they are entitled to ₹2 lakh.
- Permanent Partial
Disability Benefit: For partial disabilities resulting
from an accident, the person receives ₹1 lakh.
This coverage is
intended to provide financial assistance to the policyholder or their family in
the unfortunate event of an accident.
Premium
The premium for
PMSBY is extremely affordable, making it accessible to individuals from lower
income groups. The annual premium is ₹12 (exclusive of GST), which is
automatically deducted from the savings bank account of the policyholder. This
low-cost premium ensures that even the most economically vulnerable individuals
can avail themselves of this insurance scheme.
Claim Process
The claim process
is designed to be straightforward, ensuring that beneficiaries, especially from
rural and remote areas, can access the benefits with minimal hassle. The claim
can be processed through the associated bank where the policyholder holds an
account. In case of an accident, the claimant or nominee must provide the
necessary documentation, including the death or disability certificate, FIR
(First Information Report), and medical reports, to facilitate the claim.
Benefits
- Affordable Coverage: The low
premium makes the scheme affordable for individuals in the lower-income
groups.
- Wide Accessibility: With the
requirement of a savings bank account, this scheme is accessible to a
large number of people, especially in rural areas.
- Support for Families: In the
unfortunate event of an accident leading to death or disability, the
financial assistance provided by the scheme ensures that families do not
face severe financial hardship.
- Ease of Enrollment and
Claiming:
With the integration of the scheme with banks, the process of enrollment
and claims becomes simple and efficient.
4. Role of
PMSBY in Preventing and Reducing Poverty, Inequality, Social Exclusion, and
Financial Vulnerability
Poverty Alleviation
Accidents can
often have catastrophic financial consequences for economically weaker
families. Medical expenses, loss of income due to disability, and the sudden
death of a breadwinner can push families deeper into poverty. The Pradhan
Mantri Suraksha Bima Yojana directly addresses this challenge by
providing a financial cushion to individuals and families in case of accidents.
The sum assured under PMSBY ensures that the policyholder’s family does not
suffer from financial ruin in the event of death or disability.
For example, an
individual working in the informal sector or as a daily wage laborer, who may
not have access to other forms of insurance, would typically be left vulnerable
in case of an accident. With PMSBY, such individuals can access insurance
protection at a very low cost, thus preventing them from falling deeper into
poverty due to unforeseen circumstances.
Reducing Inequality
One of the most
striking aspects of PMSBY is its focus on inclusivity and financial
accessibility. The scheme is designed specifically to reach the economically
marginalized sections of society, including people working in the unorganized
sector, rural populations, and low-income urban dwellers. The ultra-low premium
of ₹12 per year ensures that the scheme does not discriminate based on income
levels, making it a significant tool in addressing the growing inequality in
India.
The provision of
affordable insurance for accident-related risks ensures that the financial
protection typically reserved for the affluent is extended to the poorest
sections of society. This contributes to reducing the stark contrast between
the insured and uninsured populations, ultimately narrowing the gap in
financial security between the rich and the poor.
Combating Social Exclusion
Social exclusion
refers to the process by which certain groups within society are systematically
marginalized or denied access to basic resources and services. In India,
individuals from lower socioeconomic backgrounds, particularly those from rural
or underprivileged communities, often face social exclusion when it comes to
accessing financial services like insurance. This exclusion not only limits
their access to social protection but also exacerbates their vulnerability to
economic shocks.
PMSBY plays a
vital role in combating this exclusion by extending its coverage to all
citizens with a bank account, irrespective of their economic status,
educational background, or geographic location. The low-cost and easily
accessible nature of the scheme ensures that even the most marginalized groups,
including daily wage workers, farmers, and others in rural areas, can avail
themselves of accident insurance protection.
By providing
widespread access to accident insurance, PMSBY helps integrate excluded
communities into the broader social and economic fabric of the country,
fostering inclusivity and enhancing the resilience of vulnerable populations.
Financial Vulnerability Mitigation
Financial
vulnerability is a condition where individuals or families lack the resources
to absorb economic shocks. In developing economies like India, economic shocks
can take many forms, including medical emergencies, loss of livelihood, or accidents.
Such shocks can have devastating consequences for those who are financially
vulnerable.
PMSBY mitigates
this financial vulnerability by ensuring that individuals and families receive
immediate financial support in case of accidents. The coverage provided under
the scheme helps policyholders manage the financial repercussions of accidents
without having to resort to expensive loans or depleting their savings. In the
absence of such insurance, these individuals may fall into debt, struggle to
pay for medical expenses, or lose their livelihood.
By reducing the
financial burden of accidental risks, PMSBY helps strengthen the economic
resilience of low-income households, allowing them to recover more quickly from
the impacts of unforeseen events.
5. Conclusion
The Pradhan
Mantri Suraksha Bima Yojana (PMSBY) is a crucial tool in India's
strategy to provide financial security to its economically weaker sections. By
offering an affordable, inclusive, and easily accessible accident insurance
plan, the scheme plays a vital role in alleviating poverty, reducing inequality,
combating social exclusion, and mitigating financial vulnerability among
vulnerable populations.
While India has
made significant progress in increasing financial inclusion, schemes like PMSBY
are essential to ensure that the benefits of financial security are accessible
to all, particularly the marginalized and economically disadvantaged. In the
face of rapid economic development, this scheme stands as a testament to the
government's commitment to creating a more inclusive and equitable society where
financial risks are shared and mitigated, and social justice is promoted.
PMSBY, with its
affordability and accessibility, is helping create a more financially secure
and resilient India, particularly for those most in need of protection. Through
such initiatives, India can take significant strides toward eradicating poverty
and inequality and building a more inclusive society where no one is left
behind in times of need.
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