Q.19. Contrary to other life insurance products, benefit under PMJJBY is
payable only to nominee of the insured on the death of the insured. Why is
there no maturity benefit or surrender value, which is available in normal life
insurance policies?
The cover under PMJJBY is for death only and hence benefit will accrue only to
nominee. PMJJBY is a pure term insurance policy, which covers only mortality with
no investment component. The pricing is also accordingly low when compared to
other life insurance policies where maturity benefits, surrender value etc. are available.
It has been designed to provide life insurance cover to the weaker sections of the
society. With this aim, the premium is kept low, eliminating the investment
component.
Q.20. Will the PMJJBY scheme which is being promoted aggressively and sold
in large numbers accrue huge profits to the foreign insurance Companies who
in joint venture with Indian entities have floated life insurance companies and
are operating this insurance cover?
Only Indian Insurance Companies as defined in the Insurance Act can operate in
India. The policy holders’ funds of all such insurance companies operating in India
including those with foreign partners within the 74% cap is to be invested in India as
per regulations and cannot be invested abroad. The premium charged for PMJJBY
has been worked out based on actuarial calculations considering all risk factors,
current mortality rates and adverse selection. Thus, there is no scope for any huge
profits accruing from the scheme.
Q.21. Why are foreign insurance Companies associated with PMJJBY when
LIC which is a government owned corporation could have managed this
scheme launched by the government?
There are 24 Life insurance companies operating in India, who are licensed by IRDAI
to carry on life insurance business in India. To promote competition and better
pricing and service to customers, all these companies are permitted to participate.
Moreover, they are all Indian insurance companies. Their foreign partners, if any,
have only a stake in these companies within the stipulated 74% cap. However, LIC is
still the primary insurer involved in operation of the scheme.
Q.22. In case of non-settlement of claims is it possible to proceed legally
against the foreign insurers in India?
There are no foreign insurance Companies directly operating in India. As permitted
by the regulations there are Companies operating as joint ventures with Indian
companies, where the stake of foreign insurers is restricted to 74% only. By
definition, these are Indian insurance companies. All these companies are subject to
Indian laws and there is no bar against proceeding legally against them.