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LATEST NEWS UPDATES | LIC cuts lifeline of 38 lakh rural poor

LIC cuts lifeline of 38 lakh rural poor

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published Published on Oct 22, 2010   modified Modified on Oct 22, 2010

The Union government's efforts to provide quick and quality insurance services to 38 lakh rural landless agricultural labourers in the state under the Aam Aadmi Bima Yojana (AABY) have suffered a serious setback with the Life Insurance Corporation of India (LIC) refusing to renew the scheme.

The LIC's decision has not only resulted in hardships not only to the poor households over the past six months but also to the children of beneficiaries, who are given educational assistance of Rs 300 per quarter per child for two children studying in classes IX to XII. The annual premium payable per member is Rs 200, half of which is paid by the central government and the rest is borne by the state government.

Official sources said LIC has stopped the renewal of insurance cover abruptly to 38 lakh members for want of enhanced premium of Rs 320 per member per annum as against the existing premium of Rs 200 in view of the very high claims ratio and mortality experience. The death rate per 1000 as calculated by the officials stood at 9.4 in 2008-09 and 9.3 in 2009-10.

Several pleas and promises by the state government to LIC officials for renewal of the premium afresh during 2011-12 fell on deaf ears with the latter refusing to budge. The sources said local LIC officials expressed their helplessness in the matter saying though the number of deaths registered last year (33,074) was less than that in 2008-09 (35,830), their total losses had mounted to Rs 81 crore.

The scheme was successfully implemented till March 31, 2010, for 38 lakh rural landless agricultural labourers until LIC cited losses of Rs 40 crore for 2008-09 and Rs 41 crore for 2009-10 because of the AABY scheme. The sources said LIC officials had assured to process all the pending claims from April 1 this year, subject to a 60% increase in the premium amount for AABY.

The state and the Centre have remitted Rs 152 crore to LIC towards the premium amount for the two financial years and the state has already paid Rs 38 crore as its share towards this year's premium at the existing rate.

The AABY, which covers death and permanent disability for the benefit of rural landless households, is being implemented in the state through the Society for Elimination of Rural Poverty (SERP), department of rural development. The scheme provides for insurance of the head of the family or an earning member of the family of rural landless household between the age of 18 and 59 against natural death as well as accidental death and partial/permanent disability.

It is reliably learnt that the state government has sent an SOS to the Union finance ministry to come to the rescue of these 38 lakh rural landless households, as Prime Minister Manmohan Singh had assured in 2007 that the scheme would be continued uninterrupted.


The Times of India, 22 October, 2010, http://timesofindia.indiatimes.com/city/hyderabad/LIC-cuts-lifeline-of-38-lakh-rural-poor/articleshow/6789474.cms


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