Premiums will be fixed at Rs 12 for accident insurance and Rs 330 for term insurance.
In good news for policyholders, the Pradhan Mantri Jan Suraksha Scheme will not see a price hike for the fourth year in a row.
The scheme includes a personal accident plan and a term insurance cover of Rs 2 lakh each.
The policies that will be renewed from June 1, will have a charge of Rs 12, for personal accident, and Rs 330 for term insurance cover, as the annual premium for 2019-20.
Sources told Moneycontrol that the Finance Ministry wants to keep the premiums at the same level to boost product sales and renewals.
However, considering the heavy loss ratios under the schemes, insurers are looking to reduce their exposure to the scheme. Loss ratios have touched 140 percent meaning for every Rs 100 collected as premium, Rs 140 is paid out as claims.
The personal accident scheme (Pradhan Mantri Suraksha Bima Yojana) and term insurance scheme (Pradhan Mantri Jeevan Jyoti Bima Yojana) were launched in May 2015. This was launched to offer a social security scheme to individuals.
"Premium increases will lead to a further drop in new enrollments which have been flat for the past one year. Hence, the price of the products will remain the same in 2019," said an official.
While the number of new enrollments have been seeing a decline, renewals have been happening since they follow an auto-debit facility.
The country will go into general elections in April 2019 and the new government is expected to take over by June 2019. However, tweaks to the policy premium are unlikely later this year.
While insurers had sought a 10-15 percent increase in the premium for these schemes last year as well, the government refused to hike the rates.
In 2018, the government allowed individuals to also enroll for the life insurance schemes for a limited period rather than the statutory one year. For example, if someone enrolled in September, October and November, they had to pay Rs 258. If they enrolled in December, January and February, they had to pay Rs 172 while if they enrolled in March, April or May, they had to pay Rs 86.
The reduction in the tenure of the policy was to encourage more number of people to take the cover. As on April 23 last year, there were 135 million subscribers under PMSBY and 53.3 million subscribers under PMJJBY.
While there is an auto-debit facility for renewal premium collection, policyholders can withdraw consent to be part of the scheme at the time of renewal.
Apart from the two insurance schemes, the initiative also consists of a pension product, Atal Pension Yojana. All individual (single or joint) bank account holders in the age 18 to 70 years in participating banks are entitled to join.
