MICROCAPITAL.ORG BRIEF: The Life Insurance Corporation of India Extends Microinsurance Policies to Cover All Workers in 255 Rural Indian Villages

All 11,500 workers under the National Rural Employment Scheme (NREGS) in the Saikul area of Manipur, India, are now registered microinsurance policyholders under the Life Insurance Corporation of India (LIC). NREGS, enacted by the Indian Parliament in 2005, works to improve financial inclusion in rural areas, especially for people living below the poverty line. The 11,500 workers, spanning across 255 villages, will receive a total of Rs 150 million (USD 3.2 million) upon maturity of the insurance policies, which range between 5 to 15 years.

As of August 2009, LIC, India’s largest government-owned life insurance company, had sold 416,000 microinsurance policies. LIC launched its first microinsurance product, Jeevan Madhur, in 2006. Jeevan Madhur offers a package of savings, protection, accident benefit and disability benefit. The product provides coverage of Rs 5,000 to 30,000 (USD 110 to 650) for annual payments ranging from Rs 25 to 250 (USD 0.55 to 5.5). During fiscal year 2008-2009, LIC collected Rs 312 million (USD 6.7 billion) in first year premiums.

By: Stefanie Rubin, Research Assistant

About the National Rural Employment Guarantee Scheme (NREGS):

Established by the Indian Parliament under the National Rural Employment Act (NREGA) in 2005, NREGS guarantees 100 days of wage employment every calendar year for any adult willing to do unskilled manual labor. The plan covers all 593 districts in India. The government has provided Rs 391 billion (USD 8 billion) for the scheme for fiscal year 2009 – 2010.

Many, including the World Bank, have criticized NREGS as “a barrier to economic development.” They claim that NREGS is a barrier to internal mobility, as it encourages the poor to stay in rural areas rather than move to cities, which is a necessary aspect of economic development. Others have argued that NREGS’ poor organizational structure and lack of transparency make it less credible.

About Life Insurance Corporation of India (LIC):

LIC was formed by the Indian Parliament in 1956 and is fully owned by the Government of India. Headquartered in Mumbai, LIC has 2,048 branches and 106 divisional offices. As of 2007, it had total assets of USD 165 billion. According to a 2006 article in The Economic Times, LIC is India’s largest insurer, with a market share of about 77 percent.

LIC currently provides two microinsurance products: Jeevan Madhur and Jeevan Mangal. Jeevan Madhur offers individuals age 18 to 60 with a package of savings, protection, accident benefit and disability benefit. The product provides coverage of Rs 5,000 to 30,000 (USD 110 to 650) for annual payments ranging from Rs 25 to 250 (USD 0.55 to 5.5). The term of the policy ranges between 5 to 15 years. Jeevan Mangal is similar to its predecessor, Jeevan Madhur, but provides coverage of up to Rs 50,000. The term ranges from 10 to 15 years and the premium could be as low as Rs 15. As of August, 2009, over 50,000 Jeevan Mangal policies had been sold in the Indian states of Kerala and Tamil Nadu.

Additional Resources:

The Sangai Express: “NREGS Workers,”

http://www.e-pao.net/GP.asp?src=Snipp13..191109.nov09

The Press Trust of India: “World Bank Sees NREGS as a Barrier to Economic Development,” http://www.business-standard.com/india/storypage.php?autono=351922

Inforchangeindia.org: “Where is NREGS Heading?” http://infochangeindia.org/200910097974/Governance/Features/Where-is-NREGS-heading.html

MICROCAPITAL STORY: Life Insurance Corporation of India (LIC) Targets 4 million Micro insurance Policies in Rural India

Press Trust of India: “LIC to Triple Micro Insurance Biz, Eyes 42 Lakh Policy Sales,” http://www.business-standard.com/india/news/lic-to-triple-micro-insurance-biz-eyes-42-lakh-policy-sales/73981/on

LIC Annual Report 2008: http://www.licindia.in/pages/Annualreport.pdf

The Economic Times: “Kalam Unveils LIC’s Micro Insurance Product,” http://economictimes.indiatimes.com/Personal-Finance/Insurance/Insurance-news/Kalam-unveils-LICs-micro-insurance-product/articleshow/2035896.cms

The Hindu: “LIC Targets 40,000 Micro Insurance Policies From Southern Districts This Fiscal,” http://beta.thehindu.com/business/companies/article16010.ece

Source Article:

The Sangai Express

NREGS Workers

Imphal, November 18 2009: For the first time in Northeast India, all the 11,500 NREGS workers of Saikul Block have registered themselves in Jeevan Madhur, micro insurance policy of the Life Insurance Corporation of India (LIC) .

A total sum calculated at Rs 15 crores will reach the hands of the NREGS workers of all the 255 villages of the block on the maturity of the policy.

Khamenlok Area Chief Welfare Association expressed gratitude to Deputy Commissioner Nidhi Kesarwani and SDO Dr K Shyamsunder for launching the scheme in the block.

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