This post is intended for everyone who has hired help at home. I have a cook and a maid at home, and a caretaker in the building I live in. They are some of the most sincere people I have met, and it is for this very same reason that I have always loaned them money whenever they need it. But I also realised that they are never debt free. The moment one cycle of repayment is over, they need money again, more often than not for school fees, medical expenses or some other essential purchase which they aren’t able to do due to lack of savings or because their husbands drink away all their money. I suspect a lot of your reading this post would relate to this scenario.
This is what led me to research on ways to help them beyond just loaning them money and I came across quite a few government schemes which are immensely beneficial, and in this post ( long, but do read ), I would like to outline a few simple things that I have done for the people who work for me, and if each one of you can do the same and share this out to as many people are possible, it would make a big difference:
- Get them to open an SBI account with internet banking and transfer their salaries directly into their account. You need to take the effort to do a one time registration.( I mention SBI & Internet banking for the ease of enrollment of some of the social security schemes mentioned later. While some of the other banks also have these linkages, I guess it’s fair to assume that SBI would be a lead partner for many of these initiatives.) This by itself solves 3 thing:
- Financial Inclusion
- Alcoholism is rampant among the husbands of maids & cooks that i have interacted with. With direct transfer of money into the account, some part of it remains safe.
- Some degree of inflow helps their credit rating and ability to get loans in the future from the bank.
- Term Insurance :Given the nature of their jobs and the fact that most of them have some dependants, some degree of term insurance is vital! There are 2 schemes, 1 called the PMSBY, Pradhan Mantri Suraksha Bima Yojana, which has a premium of only Rs. 12 per annum and covers accidental death and injury and PMJJBY, Pradhan Mantri Jeevan Jyoti Bima Yojana, with an annual premium of Rs. 330. I would recommend enrolling them for both. When you login into SBI, there is a link called “Social Security Schemes”. Click and apply and it’s done. 342 Rs. / Annum for 4 lakhs of insurance!
- Pension :This is going to be your toughest sell as the idea of a pension after the age of 60 is too alien to them. But I think it’s vital that we set it up. The government scheme for the same is called the Atal Pension Yojana and for someone who is 30, a monthly contribution of 577 will get them a pension of 5000 / month from the age of 60. This can again be set up in one click through SBI under its “Social Security Schemes” link as mentioned above.
- Health:The best government scheme for the same is the RSBY (Rashtriya Swasthya Bima Yojna) and has an annual premium of just Rs. 50 ! But the odds are that most of your domestic help won’t be eligible for the same, as it’s primarily meant for BPL citizens, or the enrollment for the same has stopped as was the case in Bangalore when i checked with the enrollment officer. Do check out the status for your state on the RSBY website. Even if the RSBY is not applicable, please do get them another insurance scheme as health care costs are one of the primary reasons for them being in a perennial cycle of debt. I will outline a few that i found during my research, though unfortunately there is no one-click convenience for RSBY or any of the other options mentioned below:
- In-case they have a family member of they themselves suffer from any disability ( including Mental -retardation and mental illness ) then the best scheme is Swavlamban, being offered by The New India Assurance Co Ltd . This provides a cover of 2 lakhs. The process for applying is offline and is going to require some guidance from your side. But for a premium of Rs. 355 / annum, and the fact that most normal insurance schemes have all kinds of exclusions which don’t cover people with disabilities, this scheme, if applicable, is more than worth the effort.
- Assuming the above isn’t applicable to their family, do get them a family floater plan and cover all their dependents in it. Here the options are many, but what I observed is that most of the private firms out there don’t offer sub 2 lakhs covers (intrinsically driving premiums up). Please don’t sign them up for an expensive policy even if you are willing to foot the bill, as their next employer might not do the same, which will then lead to them discontinuing the same. The cheapest family floater plan I could find was the Janata Mediclaim Policyfrom New India Assurance which has fixed covers of 50,000 & 75,000, with the 75K cover costing 1050 for someone who is less than 35 yrs old. If you feel that they, irrespective of whether an employer foots the bill or not, will have a higher affordability, then IFFCo-Tokio’s IFFCO-TOKIO Family Floater Plan seems to be the best deal. ( ~4000 / annum for a 2 lakhs cover for a family of 4 – husband / wife & 2 small kids ). This can be purchased online.
- Also, it’s quite likely that they have aged dependents above the age of 60. Including them in a family floater plan won’t be possible as most policies have a cut off age of entry which is lower than 60. Overall, there are very few policies that cater to senior citizens, and unfortunately all of them are relatively expensive. The best among the lot seems to be theSenior Citizen Mediclaim Policy from New India Assurance Company, but even that’s a min. of Rs. 4000 / year for a 1 lakh cover.
Every year you anyway need to give them increments. Educate them as to how it’s so much better if you channel the increment into the above mentioned schemes. For a 30 year old hired help, for a cost of ~ Rs. 700 / month , you can ensure that he / she has a Rs. 5000 pension, 4 lakhs of term insurance & 75,000 of health cover !
PS: Many of the schemes mentioned here have offline methods of applying too. I assume that it would be far more convenient to the audience reading this to do things online. Also, I have no vested interest to promote SBI, New India Assurance Company or IFFCO-TOKIO, nor do I have any energy to discuss and debate any political angle to the government schemes I have mentioned.