Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)
Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) is a government-supported life insurance scheme launched in 2015 with the objective of providing affordable and accessible life insurance coverage to a large segment of India’s population. The scheme is primarily targeted at economically weaker and lower-income groups who traditionally remained outside the formal insurance system. In banking, finance, and the Indian economy, PMJJBY is an important instrument for social security, financial inclusion, and household risk protection.
By linking life insurance coverage directly with bank accounts, PMJJBY integrates insurance services into the formal banking framework and strengthens the overall financial safety net.
Concept and Objectives of PMJJBY
Pradhan Mantri Jeevan Jyoti Bima Yojana is a pure term life insurance scheme that provides financial protection to the family of the insured in the event of death. The scheme is designed to be simple, low-cost, and easily accessible through the banking system.
The key objectives of PMJJBY are:
- To provide basic life insurance coverage at an affordable premium
- To enhance social security for vulnerable sections of society
- To promote insurance penetration through bank-linked enrolment
- To reduce financial hardship faced by families due to premature death
By addressing mortality risk, PMJJBY supports income security and long-term financial stability.
Features of the Scheme
PMJJBY provides a uniform sum assured payable to the nominee upon the death of the insured person, irrespective of the cause of death. The policy operates on a yearly renewable basis, ensuring continued coverage as long as the premium is paid.
The premium is automatically debited from the subscriber’s bank account, simplifying administration and ensuring continuity of coverage. This auto-debit mechanism reduces the risk of policy lapse due to manual non-payment.
Eligibility and Enrolment
The scheme is open to individuals within a specified age group who hold a savings bank account. Enrolment is voluntary and requires simple consent from the account holder. Each individual is eligible for only one PMJJBY policy, even if multiple bank accounts are held.
Nomination is mandatory under the scheme, which ensures that insurance benefits are transferred smoothly and promptly to the rightful beneficiary in the event of a claim.
Role of Banks in PMJJBY
Banks serve as the primary channel for the implementation of PMJJBY. They are responsible for enrolling customers, collecting premiums through auto-debit, and facilitating communication between policyholders and insurance companies.
Through PMJJBY, banks expand their role beyond traditional deposit and credit functions to include insurance distribution, especially in rural and semi-urban areas. This enhances customer engagement and strengthens the banking network at the grassroots level.
Role of Insurance Companies
Life insurance companies underwrite the risk covered by PMJJBY and are responsible for claim processing and settlement. The scheme operates on a group insurance model, allowing insurers to spread risk across a large and diversified pool of policyholders.
This large risk pool enables insurers to offer life cover at a very low premium, making the scheme financially viable while ensuring widespread coverage.
Regulatory and Institutional Framework
PMJJBY functions within India’s broader financial regulatory environment. The Reserve Bank of India supports the scheme indirectly by regulating banking operations, basic savings bank deposit accounts, and financial inclusion initiatives.
Insurance operations under PMJJBY are governed by insurance regulations that ensure transparency, consumer protection, and financial soundness of participating insurers.
Contribution to Financial Inclusion
PMJJBY has significantly contributed to expanding insurance coverage among first-time policyholders. A large proportion of subscribers under the scheme had no prior access to formal life insurance.
By integrating insurance enrolment with bank accounts, the scheme encourages regular use of banking services and promotes awareness about financial risk management and protection among low-income households.
Significance for the Banking and Financial System
For the banking system, PMJJBY has broadened the scope of financial services delivered to customers. While the scheme does not generate high direct profitability, it strengthens long-term customer relationships and creates opportunities for offering additional financial products.
At the systemic level, wider insurance coverage enhances household financial resilience and reduces vulnerability to income shocks.
Economic Significance in the Indian Economy
From a macroeconomic perspective, PMJJBY contributes to social and economic stability by providing financial support to families affected by the death of a breadwinner. Insurance payouts help prevent distress borrowing, reduce poverty risks, and support household consumption.
By strengthening social security mechanisms, PMJJBY complements broader development and welfare policies in the Indian economy.
Advantages of Pradhan Mantri Jeevan Jyoti Bima Yojana
PMJJBY offers several advantages:
- Affordable life insurance coverage with simple features
- Easy enrolment through existing bank accounts
- Automatic premium deduction ensuring continuity
- Enhanced financial security for vulnerable households