Aam Aadmi Bima Yojana: Benefits and steps to enrol

With an aim to provide social security to the people belonging to the low-income groups, the Government of India launched AABY on 2nd October 2007.

As per the Ministry of Labour and Employment data, approximately 93% of India's total workforce is employed in the unorganised sector. Workers belonging to these occupational groups often shy away from buying health insurance coverage due to their poor financial state. However, in case of accidental injuries, illnesses, or death, their families may have to face the excessive financial brunt.

To provide social security to this section of the population, India launched "Aam Aadmi Bima Yojana (AABY)" on 2nd October 2007. The literal translation of the name is the common man's insurance scheme. It provides coverage against natural or accidental death and disability to the Below Poverty Line (BPL) families' breadwinners.

What is the AABY scheme?

As specified above, the Aam Aadmi Bima Yojana (AABY) is a social security scheme, launched on 2nd October 2007. It provides health insurance coverage against contingencies such as death or disability. It is targeted towards the breadwinners of low-income families in India, and benefits those working in the unorganised sector, such as daily wage labourers, fishermen, cobblers, auto drivers, etc.

The AABY scheme started operating successfully from 2013 under the supervision of the Finance Ministry of India.

Features & benefits of the AABY scheme

The scheme covers family heads or lone earning members of the families belonging to the low-income groups.

The coverage amount remains fixed throughout the policy period. The policyholder gets a lump sum in case of a claim.

In case of the insured person's natural death during the coverage tenure, the nominee or surviving family members will be paid ₹30,000.

In case of accidental death or total permanent disability (loss of both eyes or both limbs), the policyholder or his/her nominee gets ₹75,000.

In case of partial permanent disability (loss of one eye or one limb), the policyholder or his/her nominee gets ₹37,500.

The scheme is designed to cover the members of 48 occupational groups identified by the Government.

The premium amount that's charged to provide the benefits of AABY scheme is ₹200 per annum. While 50% of this premium will be subsidised from the Social Security Fund, the State Government or Nodal Agency will bear the remaining 50% amount.

The AABY scheme also offers a free scholarship of ₹100 every month to the eligible children (maximum of two children per person) to ensure that they receive uninterrupted education. The children must be studying between class 9th to class 12th to avail of this benefit.

By availing the AABY scheme's benefits, the insured person will also be eligible to claim certain tax benefits under Section 80(D) and Section 10(10D) of The Income Tax Act, 1961.

Insured members can approach their nearest Life Insurance Corporation (LIC) branch to solve their queries or issues regarding this scheme.

Eligibility criteria for AABY

As mentioned above, the AABY scheme is meant to benefit the low-income families of India. Below is the basic eligibility requirement for an individual to avail the benefits of this scheme:

• The applicant should be between 18 to 59 years of age.
• The applicant should be the head of the family or its lone earning member, belonging to the EWS, i.e. Below the Poverty Line (BPL), or slightly above the poverty line.
• The individual must belong to a rural landless household.
• The individual must belong to one of the 48 vocational groups, identified as beneficiaries under this scheme.
• Only one member per family can be covered under the scheme.

How to enrol for the AABY scheme?

The process to enrol for the AABY scheme is simple and hassle-free. No lengthy paperwork and documentation is required. However, since this is a Government-sponsored scheme, the process is slightly different from buying a regular insurance plan. Below are the steps one needs to follow:

Step 1 – Download and fill in the Aam Aadmi Bima Yojana application form from the relevant Government website.

Step 2 – Visit the Nodal Agency, an institution or NGO appointed by the Government, to carry out the enrolment process for this scheme.

Step 3 – Submit a specific set of documents along with the application form to the Nodal Agency.

Below are the documents that need to be submitted by the applicant to become a beneficiary under the AABY scheme:

• Duly filled application form
• Proof of identity (voter ID, aadhar card, ration card)
• Address proof
• Age proof, or extract of the applicant from his/her birth certificate or school certificate
• Income or BPL certificate

Once the documents are submitted to the Nodal Agency, the applicant would be enrolled to receive the scheme's benefits.

How to make a claim?

The claim process for this scheme is relatively easy as compared to other health insurance products. In case of a contingency, the insured member or his/her nominee will have to approach the Nodal Agency's designated personnel. While filing a claim, the claimant will have to submit the relevant documents such as death certificate of the insured person, autopsy report (in case of accidental death), copy of FIR, medical proof of disability, etc.

After receiving the relevant documents, the Nodal Agency officer will begin the process to verify the claim's authenticity. Once the claim is verified, the beneficiary amount will be transferred to the targeted bank account through the National Electronic Fund Transfer (NEFT) process.