Insurance scheme enrolment for a four-member household
Four members of one household hold savings accounts in the same bank, and the branch's scheme desk is enrolling customers for the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), the Pradhan Mantri Suraksha Bima Yojana (PMSBY) and the Atal Pension Yojana (APY). The household consists of Ramesh, 46, an auto-rickshaw driver; his wife Sunita, 43, who works as domestic help; their son Amit, 24, a postgraduate student with no taxable income; and Ramesh's mother Kamla, 69. The family's two main worries are a large one-time payment if the earning member dies, and some regular income in old age. Ramesh wants to enrol everyone in every scheme on the same day and asks the clerk to recover the entire annual premium from a single account that usually carries a balance of about ₹1,500. The bank's cut-off for the annual auto-debit is 31 May.
1. Who in the household is eligible for which of the three schemes, and how many enrolments in total are possible on the same day?
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Apply each scheme's entry-age band, because that, not the family's wish, decides the answer.
- PMJJBY (₹2 lakh life cover, entry age 18–50): Ramesh (46) yes, Sunita (43) yes, Amit (24) yes, Kamla (69) no - she is past the entry age.
- PMSBY (₹2 lakh accidental death/total disability cover, entry age 18–70): all four qualify, including Kamla.
- APY (guaranteed pension from 60, entry age 18–40): only Amit qualifies. Ramesh (46), Sunita (43) and Kamla (69) are outside the band. Amit's student status is not a bar; having a savings account and not being an income-tax payer are the relevant conditions.
So the count is 3 + 4 + 1 = 8 enrolments. The clerk should say plainly that Kamla cannot be given life cover under PMJJBY and that the parents cannot be brought into APY, rather than collecting forms that will be rejected.
2. Ramesh dies of a heart attack in October, with all premiums duly paid. Which covers respond, and which do not?
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The cause of death decides everything here.
- PMSBY does not pay. It is a pure accident cover: accidental death, total disability (₹2 lakh) and partial disability (₹1 lakh). Death from a heart attack is natural, not accidental, so the claim fails even though the premium is fully paid.
- PMJJBY pays ₹2 lakh to the nominee, provided the cover was in force - premium deducted and the policy not lapsed - because it is a one-year renewable life cover that responds to death from any cause, illness included.
The lesson the clerk should convey: the two covers are not substitutes. PMJJBY answers the family's worry (a) about a large one-time payment on the earning member's death; PMSBY only helps if death or disability is accidental. A family that enrols only in the cheaper ₹20 PMSBY believing it is 'insurance' will find no claim payable in exactly this situation.
3. Should the clerk accept Ramesh's proposal to fund all premiums from the single account holding about ₹1,500? Support the answer with arithmetic and identify the operational risk.
Read the worked answer
Do the sum first. PMJJBY at ₹436 each for Ramesh, Sunita and Amit is 3 × 436 = ₹1,308. PMSBY at ₹20 each for all four is 4 × 20 = ₹80. Total annual debit = ₹1,388 against a balance of about ₹1,500, leaving roughly ₹112.
On paper it fits, but the proposal should still be refused as framed, for three reasons:
- No buffer. Any bank charge, cheque clearing, or a slightly lower balance on the debit date will make the debit fail. A failed auto-debit means the cover lapses, and the family discovers the gap only when a claim arises.
- APY is a different animal. It is a monthly contribution, not an annual premium, so it cannot be lumped into this one debit.
- Single point of failure. Pooling four adults' premiums in one account exposes all covers to one shortfall.
Advice: keep a cushion of at least two to three times the annual premium, and preferably let each adult's premium be debited from their own account.