Social Security Insurance

Social security insurance constitutes a key pillar under the Insurance and Pension Sector unit of the Indian economy. It forms an institutional risk-mitigation framework designed to insulate citizens from vulnerabilities arising out of health shocks, accidents, death, and livelihood disruptions. According to the International Labour Organization’s (ILO) World Social Protection Report, India’s social protection coverage doubled from 24.4% in 2021 to 48.8% in 2024, now covering nearly 920 million individuals through at least one institutional welfare or insurance instrument. The Insurance Regulatory and Development Authority of India (IRDAI) has aligned this expanding framework with its structural vision of “Insurance for All by 2047”. This objective is further supported by the Sabka Bima, Sabki Raksha (Amendment of Insurance Laws) Act, 2025, which raised the Foreign Direct Investment (FDI) limit in insurance to 100% to mobilize global capital into the domestic social security grid.

Constitutional and Legislative Foundations

Constitutional Directives

• Article 41: Directs the State to ensure the right to work, to education, and to public assistance in cases of unemployment, old age, sickness, and disablement.
• Article 42: Mandates the State to make provision for securing just and humane conditions of work and for maternity relief.
• Seventh Schedule Allocation: Social security and social insurance feature under Item 23 and Item 24 of the Concurrent List (List III), allowing both the Parliament and State Legislatures to formulate matching frameworks.

Code on Social Security, 2020

The Code on Social Security, 2020, consolidates and modernizes nine legacy central labor laws—including the Employees’ State Insurance Act, 1948, and the Maternity Benefit Act, 1961. It provides a formal legal definition for “gig workers”, “platform workers”, and “home-based workers”, extending statutory social security insurance benefits beyond the boundaries of traditional organized employment.

Flagship Government-Led Social Security Insurance Schemes

1. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

• Administrative Nodal Agency: Department of Financial Services, Ministry of Finance. It is implemented through life insurance companies in tie-ups with commercial, regional, and cooperative banks.
• Eligibility Age Bracket: 18 to 50 years. The risk cover continues up to 55 years of age subject to regular annual premium payments.
• Nature of Coverage: Pure term life insurance policy.
• Financial Quantum: Assures a sum of ₹2 lakh payable to the nominee upon the death of the subscriber due to any cause.
• Premium Structure: An auto-debited amount of ₹436 per annum from the subscriber’s linked bank account. As of February 2026, the scheme recorded 26.88 crore total cumulative enrollments.

2. Pradhan Mantri Suraksha Bima Yojana (PMSBY)

• Administrative Nodal Agency: Department of Financial Services, Ministry of Finance.
• Eligibility Age Bracket: 18 to 70 years.
• Nature of Coverage: Personal accident insurance protection shielding against accidental death and disability risks.
• Premium Structure: An annual auto-debited premium of ₹20 per subscriber.
• Benefit Payout Slab:
  • ₹2 lakh for accidental death or total, irrecoverable loss of both eyes or loss of use of both hands or feet.
  • ₹1 lakh for total and irrecoverable loss of sight of one eye or loss of use of one hand or foot (partial permanent disability).

3. Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY)

• Administrative Nodal Agency: National Health Authority (NHA), under the Ministry of Health and Family Welfare.
• Nature of Coverage: The world’s largest fully government-funded health insurance framework, providing secondary and tertiary care hospitalization coverage.
• Financial Quantum: Offers a cashless health cover of up to ₹5 lakh per family per financial year.
• Targeting Methodology: Beneficiaries are selected based on identified deprivation and occupational criteria within the Socio-Economic Caste Census (SECC) database. The scheme features zero caps on family size, age, or gender.
• Strategic Integration: In pursuance of the Union Budget parameters, the health coverage was expanded to systematically cover all frontline grassroots workers—including all Anganwadi Workers (AWWs), Anganwadi Helpers (AWHs), and ASHA volunteers nationwide.

Mandatory Statutory Insurance for the Formal Sector

Employees’ State Insurance (ESI) Scheme

• Administrative Institutional Body: Employees’ State Insurance Corporation (ESIC), a statutory body under the Ministry of Labour and Employment.
• Applicability Threshold: Mandated for all non-seasonal factories and designated commercial establishments employing 10 or more workers.
• Wage Ceiling: Applicable to employees earning a monthly wage up to ₹21,000 (extended to ₹25,000 per month for persons with disabilities).
• Funding Mechanism: Driven by a mandatory co-contributory pooling architecture:
  • Employer Share: 3.25% of the payable wages.
  • Employee Share: 0.75% of the payable wages.
• Risk Lifecycle Cover: Delivers comprehensive medical benefits along with cash payouts during periods of sickness, temporary/permanent disablement, dependents’ benefits upon employment injury, and up to 26 weeks of paid maternity benefits.

Digital Public Infrastructure (DPI) Enabling Social Security

The e-Shram Portal

• Objective: Launched by the Ministry of Labour and Employment to build India’s first comprehensive National Database of Unorganised Workers (NDUW).
• Structural Tool: Registered informal workers are assigned a lifelong unique 12-digit Universal Account Number (UAN).
• Onboarding Metric: More than 30.68 crore unorganized workers (including construction laborers, migrant workers, and gig workers) are formally integrated. Women constitute 53.68% of the gross registered database.
• Functional Integration: The e-Shram database is linked with the National Career Service (NCS) portal, Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM), and the Skill India Digital Hub to automate the delivery of direct social security benefit insurance streams.

Comparative Matrix of Social Security Insurance Instruments

Prelims-Centric Trivia and Core Facts

Household Asset Reallocation

According to the Economic Survey, the collective share of insurance and pension funds within gross household financial assets in India increased to 29.6% in FY25, highlighting a structural shift toward institutionalized formal risk protection over physical assets.

Financial Inclusion Interlocking

PMJJBY and PMSBY utilize the digital architecture established by the Pradhan Mantri Jan Dhan Yojana (PMJDY). Accounts cannot be auto-debited without completing the e-KYC validation process via Aadhaar data bridges linked to the Public Financial Management System (PFMS).

The “Sabka Bima, Sabki Raksha” Mandate

Under the modified 2025-26 insurance parameters, micro-insurance agents are permitted to cross-sell composite social security packages. This enables single-window access combining life (PMJJBY), accident (PMSBY), and micro-crop risk policies within rural cooperative bank networks.

International Binding Status

India’s domestic transition toward the Code on Social Security matches its commitment as a signatory to the United Nations Sustainable Development Goals (SDGs)—specifically Target 1.3 (implementing nationally appropriate social protection systems) and SDG 5.4 (recognizing and protecting unpaid care and informal labor frameworks).