In a move that could benefit more than 62 lakh school teachers in government, municipal and private unaided schools, the Centre plans to provide them with life insurance and health insurance at highly subsidized rates.
The HRD ministry has already held detailed discussions with LIC, with the public sector insurance giant coming up with an “indicative scheme” with two components. The first component on life insurance would be available for teachers in the age group of 18-59 or till retirement age, with the insured teachers having to pay a premium of Rs 840 per annum per member for an insurance cover of Rs 2 lakh payable in case of death.
The ministry has proposed that the first component of Rs 840 per annum can be paid by the government on its own. Assuming the number of teachers to be 62 lakh, the ministry is looking at an annual expenditure of over Rs 500 crore as its contribution to the scheme.
The second component suggested by LIC would be a monthly contribution which would earn an interest of about 8% per annum on a compounding basis, with the entire amount payable at the time of retirement. According to LIC, a contribution of Rs 500 per month would generate Rs 4.76 lakh in 25 years and Rs 11.47 lakh in 35 years of service. However, the interest rate will vary from year to year.
The Centre plans to provide 62 lakh school teachers life insurance and health insurance at highly subsidized rates.
The HRD ministry thinks contribution of Rs 500 per month should come from the teachers as it is a saving scheme that would fetch a good rate of interest.
Both the proposals will be discussed in the meeting of National Foundation for Teacher Welfare on Friday. HRD ministry has held consultations with Postal Life Insurance which is yet to submit its proposal. Government will decide which of the two will be given the job. The meeting will also have to make state governments agree to the deduction of the contribution towards endowment component from the salary whereas the Centre would be making a contribution towards life cover directly.
The health insurance would cover a family of six — the teacher himself or herself, the spouse, two kids and two parents. The maximum sum assured for family in a year could be Rs 1 lakh. There would also be a corporate buffer of about Rs 25 crore that would double the reimbursement in cases of need.
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