The Bhutanese Leading the way.
In a unanimous decision, the National Council (NC) has endorsed sweeping changes to the Rural Life Insurance Scheme (RLIS), opting for a gradual and flexible approach to increasing coverage while making room for greater inclusion. Rather than backing the government’s pledged Nu 150,000 insurance sum outright, NC chose a more cautious path, allowing any future increase in the payout to be determined by the government’s financial capacity.
The NC decision follows months of deliberation and a major revision by the Good Governance Committee (GGC), which had initially proposed a three-tier coverage model with premium options tied to different sum assured amounts. However, feedback from Members of Parliament (MPs) during discussions pushed for a more ambitious figure aligned with the government’s earlier promise of Nu 150,000. In response, the GGC abandoned the tiered model altogether and recommended that any increase in insurance benefits be guided by what the country can realistically afford. This new approach, passed without objection, reflects a growing emphasis on policy sustainability over fixed commitments.
The decision comes at a time when rural families pay an annual premium of Nu 195 for a Nu 30,000 payout under RLIS, with the government subsidizing more than half of the cost. The revised direction does not offer immediate increases to this sum, but leaves room for growth based on evolving fiscal space. While some may view this as a delay in fulfilling the government’s promise, the NC’s approach signals a pragmatic recalibration rather than a rejection of expansion.
A key highlight of the reform is the inclusion of children under the age of eight in the RLIS, a long-awaited move by many rural households. Until now, the scheme had not covered children in this age group, leaving a gap in the country’s effort to provide social protection from birth. NC debated whether coverage should begin automatically at birth or upon registration in the national census. It ultimately decided that children would become eligible once they are officially registered, a move that offers clarity and administrative structure. The reform is aligned with Bhutan’s larger national goal of achieving high-income and Gross National Happiness economy status by 2034 and responds to growing concerns about protecting vulnerable groups in rural communities.
Another major issue taken up by NC was the fate of the Royal Insurance Corporation of Bhutan’s Drukyul Life Insurance Plan, which had been introduced in 2023 as a supplementary scheme to RLIS. The plan offered a Nu 100,000 payout for an annual premium of Nu 700 and mandated enrollment for all family members aged five and above. Despite its popularity, with more than 17,700 people enrolled, the plan was discontinued abruptly in April 2024 after it paid out Nu 38 million in claims against only Nu 12 million collected in premiums. This caused public concern and confusion, particularly among families who had made financial commitments based on the plan. NC has now called for the reinstatement of Drukyul Life and demanded greater clarity over its discontinuation, underscoring the need for transparent management of public-benefit schemes.
Not all proposals made it through. Among those not adopted were suggestions to create a special insurance scheme for persons with disabilities, extend the grace period for premium payments beyond the current four months, and allow loans against paid premiums. The GGC Chairperson, MP Sonam Tobgyel, explained that these ideas were not rejected for lack of merit, but because they risked complicating the general nature of RLIS. He noted that specific schemes already exist for groups such as persons with disabilities, and adding overlapping benefits under RLIS could introduce inefficiencies. He also defended the current grace period, saying it already gives sufficient time and further extension could lead to administrative backlogs and delays.
In addition to the newly adopted recommendations, NC also reaffirmed three previously presented proposals. These include restructuring the premium subsidy to target vulnerable rural populations more effectively, reducing subsidies for urban residents who can afford to pay more, reviewing the Financial Services Act to foster fair competition and private sector participation, and enabling both online and offline payment options to address digital literacy and internet accessibility issues.
The full review report, now comprising six core recommendations including the expansion of coverage to children registered in the national census, was passed unanimously by the 32 Members present. It now moves to the government for further action.
