Financial Literacy, Insurance and Government Schemes
This domain tests practical money sense and the exact parameters of flagship schemes - ages and premiums are frequent mark-losers.
Literacy that is testable
Financial literacy means budgeting, saving regularly, understanding compounding, insuring risk, borrowing within repayment capacity, and recognising Ponzi schemes and money-mule offers. RBI runs Financial Literacy Centres and the ‘RBI Kehta Hai’ campaign; banks hold literacy camps.
Insurance basics
Life insurance pays on death or maturity; general insurance covers health, motor, fire and crop. IRDAI regulates insurers. The premium buys a sum assured; a lapsed policy is forfeited for non-payment.
Schemes worth memorising
- PMJDY: zero-balance account with RuPay card and ₹2 lakh accident cover.
- PMJJBY: ₹2 lakh life cover, age 18–50, premium ₹436 a year.
- PMSBY: ₹2 lakh accidental cover, age 18–70, premium ₹20 a year.
- Atal Pension Yojana: entry age 18–40, pension ₹1,000–5,000 a month from age 60.
- DICGC: deposit insurance up to ₹5 lakh per depositor per bank.
- Mudra: Shishu up to ₹50,000, Kishore ₹50,001–5 lakh, Tarun ₹5–10 lakh; Stand Up India ₹10 lakh–₹1 crore for SC/ST and women entrepreneurs.
Worked example
A 25-year-old worker wants cheap life cover. Reasoning: PMJJBY, because he is within 18–50 and pays ₹436 for ₹2 lakh risk cover. PMSBY covers accidents only, and APY gives pension at 60 - protection, not pension, is the need stated.
Traps that cost marks
Swapping PMJJBY and PMSBY premiums and ages; saying DICGC covers ₹5 lakh per account; mixing APY entry age with pension age; assuming every scheme carries a sovereign guarantee.