LIC's low-premium cover proves profitable in Andhra

The Life Insurance Corporation of India (LIC) has proved that the social security cover aimed at poorer sections of the society can be a profitable initiative in spite of a very low annual premium, determined by the corporation itself and the Centre.

The public sector insurer has scripted a success story through 'Janashree Bima Yojana', a micro insurance package, launched in Andhra Pradesh for working masses.

The corporation has reduced by half the annual premium for two lakh rickshaw-pullers and auto-rickshaw drivers covered under the scheme and yet has made a profit.

The families of these two lakh policy holders will get a compensation of Rs 75,000 in the case of accidental death of their breadwinner by paying a premium of a mere Rs 50 per annum. That is not all. The corporation will distribute any profit earned from 'Janashree Bima Yojana' among the policy holders, according to LIC zonal manager T Chattopadhyay.

Though the annual premium for 'Janashree Bima Yojana' is Rs 200, the corporation subsidises Rs 100 upfront, to be borne out of the Social Security Fund. Even the remaining premium of Rs 100 is also reduced if the corporation gets more than what it spends on the claims of the target group.

Besides the two-lakh rickshaw-pullers and auto drivers, the corporation has also enrolled four lakh women from self-help groups (SHG) in Andhra Pradesh under the scheme.

About 44 vocational/ professional groups that fall under the marginally below or above the poverty line are eligible for 'Janashree Bima Yojana', according to Chattopadhyay.