Home » Income Tax » Tax Planning » Updates in Life Insurance Products, PMSBY and PMVVY Scheme

Insurance

Life Insurance Products 

Insurance Regulatory and Development Authority of India (IRDAI) has informed that in order to give an added fillip in providing easy access to Life Insurance Products to people at large and to enhance insurance penetration and density, Guidelines on Point of Sales (POS) were issued on 9th November 2016. As per the said Guidelines, ‘Point of Sales (POS) Product’ means simple plain vanilla type of product wherein each and every benefit is predefined and disclosed upfront clearly at the time of sale itself and is very simple to understand. The four categories of products offered under POS – Life Insurance are as given under:

  1. Pure Term Insurance Product with or without return of premium
  2. Non-linked Non-Participating Endowment Product (Money back feature also allowed)
  3. Immediate Annuity Product
  4. Any other product/product category, if permitted by the Authority.

Accidental Insurance Coverage

Pradhan Mantri Suraksha Bima Yojana (PMSBY)’ was launched on 9th May 2015 by the Government to provide accidental insurance cover. PMSBY provides accidental death/disability insurance cover of Rs. 2 Lakhs for an annual premium of Rs.12/-. Any person within the age group of 18-70 years having a bank account can enroll for PMSBY. The scheme is offered/ administered by Insurance Companies both public sector and private in tie-up with scheduled commercial banks/Regional Rural Banks/Cooperative Banks concerned.

One of the challenges faced is lack of insurance awareness and providing the low-cost PMSBY Insurance cover to common men, especially poor and the under-privileged sections of the society. The Government and Public Sector General Insurance Companies organized massive promotion campaign to create awareness amongst the greater section of population. Several steps have been taken in this regard such as creation of an exclusive website www.jansuraksha.gov.in, which hosts all relevant material/information including forms, rules etc. related to this scheme in English, Hindi and regional languages. Further, banks and insurance companies have also organized camps and outreach efforts to facilitate access to the scheme. Banners displaying features of the scheme were also installed at all banks and insurance company branches
A wide Media based publicity campaign through Local/National Newspapers and advertisements on Television/Radio/ Internet was used to create awareness about the various aspects of the schemes.
There is an improvement in the number of enrolments (auto-debit) under the Scheme from 8.85 crores in the year 2015-16 to 12.75 crore till 15th December 2017. All the accidental insurance policies being offered by different Central Government Departments have been converged to PMSBY w.e.f. 1st June 2017

Pradhan Mantri Vaya Vandana Yojana (PMVVY)

The government has launched the ‘Pradhan Mantri Vaya Vandana Yojana (PMVVY)’ to provide social security during old age and to protect elderly persons aged 60 and above against a future fall in their interest income due to uncertain market conditions. The scheme enables old age income security for senior citizens through provision of assured pension/return linked to the subscription amount based on government guarantee to Life Insurance Corporation of India (LIC).
The scheme provides an assured return of 8% per annum for 10 years. The differential return, i.e. the difference between return generated by LIC and the assured return of 8% per annum would be borne by Government of India as subsidy on an annual basis. A pension is payable at the end of each period during the policy tenure of 10 years as per the frequency of monthly/quarterly/ half-yearly/yearly as chosen by the subscriber at the time of purchase. Minimum purchase price under the scheme is Rs.1,50,000/- for a minimum pension of Rs. 1,000/- per month and the maximum purchase price is Rs.7,50,000/- for a maximum pension of Rs.5,000/- per month. The scheme is exempted from Goods and Services Tax (GST). The scheme is open for subscription until 3rd May 2018

Senior Citizens Savings Scheme, 2014 is a deposit scheme for individuals who have attained the age of 60 years. However, persons retiring on superannuation or under any Voluntary Retirement Scheme (VRS) who have attained the age of 55 years and retiring defense personnel who have attained the age of 50 years can also open the account subject to certain conditions. The upper limit of investment under this Scheme is rupees fifteen lakhs. The rate of interest under the scheme for the quarter 01.01.2018 to 31.03.2018 is 8.3%. The deposits made in the scheme are exempt from income tax under section 80C of Income Tax Act, 1961. However, the interest earned on the deposit is not exempt from income tax. Provisions of Tax Deduction at Source (TDS) are applicable to the Scheme

Sources: PIB.NIC.IN


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