The plan is part of the government’s wider effort to make its flagship life and health insurance systems more user-friendly, efficient and effective. The Insurance Regulatory and Development Authority of India (Irdai) has even formed a task force for this, the first person said.
Among the proposed measures to encourage subscription are the option for individuals to pay premiums for at least three years in advance and widening the distribution base through government financial inclusion channels such as digital banking units (DBUs), the second added.
With a cumulative subscriber base of over 750 million, the two schemes are among the largest government insurance schemes. PMJJBY offers a ₹2 lakh life cover per premium ₹436 annually to individuals aged 18-50 and currently covers more than 250 million people. PMSBY provides a ₹2,000,000 accident insurance per premium ₹20 per year for individuals aged 18-70, reaching over 500 million subscribers.
Queries emailed to the finance ministry and Irdai remained unanswered till publication.
Social security framework
The government’s decision to review the schemes is well-placed as they have brought unprecedented scale to the country’s social protection framework, said Rajiv Gupta, president of insurance marketplace PB Fintech.
“As the country moves towards greater financial security, these schemes must be updated to simplify processes, strengthen benefits and improve claimability,” he added.
But the restructuring must be done with a clear focus on simplicity, sustainability and better targeting, added Narendra Bharindwal, president of industry body Insurance Brokers Association of India (IBAI).
“When these schemes were launched, the sum insured made sense. With inflation, rising health care costs and living costs, the coverage ₹2 lakh is no longer sufficient protection for the breadwinner’s family. If we want these schemes to remain relevant in the next decade, we need to recalibrate them,” he said.
Many subscribers leave due to issues such as insufficient bank balances, automatic debit failures or lack of awareness of the need to renew insurance plans. Bharindwal suggested simplifying registration and renewal — through better digital integration, consent management and nudging — can improve persistence and ensure families are protected around the clock.
“The country’s financial landscape has also changed – UPI, Aadhaar, Jan Dhan, Central KYC, account aggregators and deeper smartphone penetration. Schemes should leverage this ecosystem to make access, service and claims much smoother and faster,” he added.
However, increasing the sum assured will increase premiums, which may drive up prices for the most vulnerable, unless supported by subsidies, tiered coverage options or continued government support, said Narendra Ganpule, partner at business advisory firm Grant Thornton Bharat.
“A peak premium model where the government subsidizes insurance premiums for the bottom 40% of the population – using the Socio-Economic Caste Census (SECC) or direct benefit transfer linked to Aadhaar – can ensure inclusiveness without compromising budgetary discipline,” he suggested, adding that the scheme must target (only) the economically weaker sections of society instead of offering insurance to those subsidizing insurance.
“The government should also move towards a single, composite product (covering life, health, disability and property) as envisioned by Irdai’s ‘Bima Vistar’ initiative, which will simplify policy administration for low-income households,” he said.
To be sure, India still has a lot of room to cover in expanding insurance coverage.
Government figures show that between 2014 and 2024, while the number of insurers increased from 53 to 70, insurance penetration rose marginally from 3.9% to 4% – compared to a global average of 7% – and insurance density almost doubled from $52 to $92, yet well below the global average of $900.
According to IBAI estimates, only half of India’s population has some form of life insurance, while only one in five individuals have health insurance.
Prime Minister Narendra Modi launched PMJJBY, PMSBY and APY (Atal Pension Yojana) on 9 May 2015.
