Finance Minister Lekey Dorji said that the finance ministry was in collaboration with the central bank to study the feasibility of increasing life insurance as per the prime minister’s directive.

At the National Assembly’s question-answer session on June 21, the minister was questioned by the Kengkhar-Weringla MP, Dorji Wangmo, on government plans to increase rural life insurance from Nu 30,000 to Nu 150,00 as pledged by the government.

MP Dorji Wangmo said that the current rural life insurance of Nu 30,000, which was revised seven years ago in 2017, was low and not enough to meet even the funeral expenses, leave alone the other rituals related to death.

She added that the people, especially in rural areas and those in the low income groups face difficulty to meet the expenses. “Many a time, people land up availing loans to meet the funeral expenses and rituals and take years to clear off these loans.”

To help ease the financial burden on the people, she said that both People’s Democratic Party and Bhutan Tendrel Party had pledged to increase the rural life insurance from Nu 30,000 to Nu 150,000, and keep the annual premium at Nu 87 per person.

She added that the government has kept provision for rural life insurance subsidy of Nu 67.73 million  for fiscal year 2023-2024 and Nu 69.08 million for fiscal year 2024-2025.

MP Dorji Wangmo asked whether the government had any immediate plans to increase life insurance and that the government should act on it at the earliest.

Responding to her question, Finance Minister Lekey Dorji said that the government’s first priority was economic development and recovery. Currently, he added, there are risks of burgeoning national debt and widening fiscal deficit.

He said that the rural life insurance of Nu 10,000 was revised to Nu 15,000 from 2009 at a premium of Nu 45 and to Nu 30,000 from the second government’s time at a premium of Nu 87 per person and Nu 108 from the government.

Lyonpo said that the subsidy reflected in the budget report was the contribution that the government would provide as a premium for Bhutanese, eight years and above.

He added that if the rural life insurance is increased to Nu 150,000, the government will have to contribute Nu 600 million every year—Nu 3 billion in next five years.

Lyonpo said that currently the government had limited budget and that if a budget is allocated for the scheme it might compromise other development areas like construction of roads, water supply, health centres, among others.

He added that the government had not provisioned budget for rural life insurance scheme in the budget year 2024-25. However, Lyonpo said that the government would provide after the economy recovers with the initiatives included in economic recovery plans in 13th Plan and economic stimulus programme.

The government is mulling whether to increase the rural life insurance scheme to all Bhutanese or to only rural residents.