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How government schemes can help from insurance to retirement

It was not the first time that we were lending money to our domestic help but that evening is etched in my memory. Our maid’s 15-year-old son was suffering from a fever for more than two weeks, and she needed money to move to him to a private hospital. After lending the money, I checked her awareness on government insurance programs she could avail. To my surprise, she had no clue. I went through all affordable options and created a list of plans that every domestic help should have.

Start with bank account

Most benefit schemes now remit money directly to the beneficiaries’ bank accounts. In case your help does not already have a bank account, you can take the help of your bank relationship manager to open one under the Pradhan Mantri Jan Dhan Yojana. With this, they get a life insurance of ₹30,000 and accidental insurance cover of ₹1 lakh. Next, you need to ensure they have registered under UIDAI and have an Aadhaar Card.

Term life insurance

The death of a breadwinner can simply result in their kids dropping out of school and being put to work. A term life insurance with a small cover can mean a lot to the dependent family members. To help them cover their life with an insurance plan, you can encourage them to enrol under the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), which costs ₹330 a year and provides a cover of ₹2 lakh to individuals in the age group of 18 to 50 years. The premium is payable through the auto-debit facility in one installment only through the bank account. Unfortunately the retail term insurance in its existing form can be bought by a restricted list of organised workers or businessmen who have proof of income above ₹2 lakh a year.

Accident insurance

In all likelihood, your help uses public transport. You must ensure you cover your help and/or employees with a comprehensive personal accident insurance policy that covers death and disability for ₹5 lakh will cost just ₹750 per year. You can additionally rely on the ₹12-a-year premium Pradhan Mantri Suraksha Bima Yojana (PMSBY) scheme, which provides covers ranging from ₹1 lakh- ₹2 lakh.

Health insurance

Domestic help is usually exposed to higher health risks from infectious diseases and accidents. A report in the British Medical Journal in 2018 suggests that close to 5.50 crore Indians are pushed into poverty every year only due to healthcare spending. It is recommended that you keep a tab on the health of your help and their family; and ensure they are enrolled into various state- and central-government sponsored healthcare programs. The Pradhan Mantri Jan Arogya Yojana is applicable for families of unorganised workers in urban areas as per SECC data. This benefit is not based on enrolment but entitlement. You simply need to check eligibility of your help.

Retirement planning

To assistant your help in becoming self-reliant, introduce the discipline of investing and long-term compounding. You can initiate them into investing into recurring deposit accounts and if they are fairly young, into long term equity. Additionally, both husband and wife can be encouraged to enrol into the government’s pension program for unorganised workers, through the Prime Minister Shram Yogi Mandhan Pension Yojana (PM-SYM). For instance, if the wife pays ₹200 from the age of 40 to 60, she will be paid ₹3,000 pension every year from the age of 60. We must do our bit by helping them live a better financial life. A little bit of education and hand-holding can go a long way in ensuring they and their families are secured during tough times.

Source: livemint

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