Aam Admi Bima Yojana

 
1. Govt. Insurance Schemes
2. Aam Aadmi Bima Yojna (AABY) Plan (NPS)
The poor and the economically weaker sections of the society seldom avail insurance
coverage for themselves against deaths and disablements. However, they are prone to natural
or accidental deaths and disablements and when the breadwinner of the family faces these
contingencies the family suffers a financial loss. It becomes difficult for the economically
weaker sections of the society to arrange for an insurance coverage because of affordability.
That is why the Government of India has launched various social security schemes for the
poor. These schemes aim to provide welfare benefits and the Aam Admi Bima Yojana is one
such social security scheme which has been launched by the Government. Let’s understand
the scheme in details –

What is the Aam Admi Bima Yojana scheme?

The Aam Admi Bima Yojana is a social security scheme which was launched on 2nd October
2007 to provide a group insurance cover to individuals belonging to specified groups. The
scheme provides insurance coverage against natural and accidental deaths and disablements.
On 1st January, the Aam Admi Bima Yojana scheme was merged with the Janashree Bima
Yojana Scheme to provide a wider scope of coverage to eligible individuals.

Salient features of the scheme

Here are the salient features of the Aam Admi Bima Yojana scheme –

 Natural death, accidental death, permanent partial disability suffered due to an

accident and permanent total disability suffered due to an accident are covered under the
scheme
 The scheme covers the members of 48 groups which have been identified for the
purpose of coverage
 The coverage amount is fixed and the amount depends on the contingency suffered
 The lump sum amount of coverage is paid in case of claim
 The scheme is implemented through a nodal agency. A nodal agency can be a State
Government, a Department of Central Ministry, Union Territory, an institutionalized
arrangement or a registered NGO that has been appointed for implementing the scheme.
 The scheme can be bought through the Life Insurance Corporation of India (LIC)
which is the only insurance company that is offering the scheme presently.
Who can be covered under the scheme?

There are certain eligibility parameters for availing coverage under the Aam Admi Bima
Yojana scheme. These parameters are as follows –

 Only one member per family can be covered. Coverage is allowed either for the
earning family member or the family head as chosen by the family being covered.
 The age of the insured should be between 18 years and 59 years.
 The individual should belong to a Below Poverty Line (BPL) family or a family
above the poverty line belonging to the vocational group identified under the scheme or
belonging to the rural landless household.
 48 vocational groups are identified under the scheme and the members belonging to
those groups can be covered. 
The identified groups are as follows –

What is the coverage under the scheme?

The Aam Admi Bima Yojana covers the following instances –

 Natural death
 Accidental death
 Accidental permanent partial disability wherein the insured loses one limb or sight of
one eye
 Accidental permanent total disability wherein the insured loses both limbs or sight or
both eyes or one limb and sight of one eye.
Besides these inbuilt coverage benefits, a free additional coverage benefit is also provided
which is called Scholarship Benefit and is available for up to two children of the insured
member. The children should be studying in Classes 9th to 12th.

The coverage amount for each coverage benefit is as follows –

Source: Press Information Bureau

What is not covered?

There are some excluded coverage instances in the Aam Admi Bima Yojana scheme. These
include death or disability arising out of the following –
 Self-inflicted injuries or attempted suicide
 Insanity or mental disorders
 Pregnancy or childbirth
 War or related perils
 Chemical, radioactive or biological weapons
 Participating in dangerous and adventurous sports
 Criminal acts or activities which breach the law
Moreover, medical expenses which are incurred due to an accident are not covered.

What is the premium under the scheme?

The Aam Admi Bima Yojana scheme has very low premiums. The premium is INR 200. 50%
of the premium would be subsidized and paid from the Social Security Fund of the
Government. Moreover, if the individual belongs to rural landless households, the remaining
50% of the premium would be paid by the State Government or Union Territory. If, on the
other hand, the individual any of the recognised vocational groups, the remaining 50% of the
premium would be paid by the nodal agency or the member himself/herself or the State
Government or Union Territory.

What are the documents required to avail the scheme?

To get covered under the Aam Admi Bima Yojana, the following documents would have to
be submitted by the eligible individuals –

 A valid age proof.

 Age proof can include any of the following documents:
o Extract from School Certificate
o Ration card
o Voter’s ID Card
o Extract from Birth Register
o Aadhar Card
o Identity card which has been issued by a reputed employer or by a
Government Department
Once any of these documents are submitted, the individual would be enrolled under the
coverage.
How to make a claim under the scheme?

The process of making a claim under the Aam Admi Bima Yojana scheme depends on the
type of contingency suffered. The claims are settled by LIC by a direct NEFT to the bank
account of the beneficiary. If NEFT facility is not available, the money is credited to the bank
account of the beneficiary after obtaining an approval from a competent authority. Moreover,
if the approval has been obtained, the claim can be paid through an account payee cheque or
through any other mode as chosen by LIC.

The different types of claims and their respective claim procedures are as follows–

 Claim process for natural or accidental death

o When the insured dies during the coverage tenure, the nominee should make a
death claim on LIC
o The nominee would have to fill up a death claim form and submit the form
along with the death certificate of the insured to the designated personnel of the Nodal
Agency
o The designated officer of the agency would, then, check and verify the claim
form. The form would then be submitted with the death certificate and a certificate stating
the eligibility of the insured.
o The documents required for death claim are:
1. A filled in claim form
2. Original death certificate and an attested copy of the death certificate
o In case of accidental death, the following additional documents would also
have to be submitted:
1. Copy of FIR filed with the local police
2. Post mortem report
3. Police inquest report
4. Final report of the police
o Once the documents are verified, the death claim would be paid.
 Claim process for disability
o The insured can make a claim for disability by submitting all the necessary
documents
o The documents required for disability claim include the following:
1. Documentary proof of accident
 2. Medical certificate issued by a Government Civil Surgeon or qualified
Government Orthopaedic. The certificate would certify that the insured suffered
permanent total or partial disability
o Once the documents are verified, the claim would be paid to the insured
member.
 Claim process for Scholarship Benefit
o The insured whose child qualifies for Scholarship Benefit should fill in an
application form for the benefit.
o The form is required to be filled half-yearly and then it should be submitted to
the Nodal Agency
o The Nodal Agency would, then, identify the students eligible to receive
Scholarship Benefit
o After identifying the students, the Nodal Agency would submit the list of
identified students to the Pension & Group Scheme unit of LIC. The list should contain
the following details of the students identified:
1. Name
2. Name of the school which the student attends
3. Class
4. Name of the insured member
5. Policy number of the master policy
6. Membership number of the insured member
7. NEFT details for paying the benefit directly to the bank account of the
member
o Once LIC gets the student list with the complete details, the scholarship
amount is credited to the bank account of the insured member through NEFT. The
payments are done on a half-yearly basis every year on 1st January and 1st July.

Implementation of the scheme so far

In March 2015, data was made available showing the implementation of the scheme. By that
time, about 32.75 lakh lives were covered under the scheme. Other important figures included
the following:
 Claims were paid in the financial year 2014-15 under 42,000 policies amounting to
more than INR 14.43 lakhs
 Scholarship claims were paid to about 6.20 lakh children amounting to more than INR
41.81 crores.
Given the sufficient insurance cover and low premiums, the scheme is expected to become
popular among the poor and would increase insurance penetration in the rural areas of India.
This would, in turn, increase the standard of living of the rural population and help in the
growth of the Indian economy.

What were the objectives of launching the Aam Admi Bima Yojana?
The Aam Admi Bima Yojana was launched by the Government of India to provide free or
subsidized insurance cover to the rural population of India or to individuals who belonged to
the economically weaker sections of the society. The Aam Admi Bima Yojana is essentially a
scheme of social security which aims for social welfare of the backward classes.

Where can an individual apply for the Aam Admi Bima Yojana scheme?
The scheme is currently being offered only by Life Insurance Corporation of India (LIC).
Thus, interested applicants can avail the coverage only from LIC through its authorised Nodal
Agencies.

Is nomination required when applying for the scheme?

Yes, nomination is a must when an individual makes an application for insurance under Aam
Admi Bima Yojana scheme. At the time of application, the application form would also
contain a nomination form which the individual should fill in and appoint a nominee. The
details of the nominee should be clearly stated so that in case of a death claim the nominee
can collect the claim amount easily. The nomination form which is filled and submitted by
the insured individual would be kept in the custody of the Panchayat of the village or the
Nodal Agency. The form would then be forwarded to LIC along with the death claim
documents when the insured member dies.

Does the insured member has to pay the premium for coverage under Aam Admi Bima
Yojana?
The insured member would have to pay 50% of the premium, which is INR 100, only if
he/she belongs to families Below Poverty Line (BPL). If the insured belongs to rural landless
households or the identified vocational groups, he/she would not have to pay any premium
for the scheme.
Can I avail coverage under the Aam Admi Bima Yojana?
Coverage under the Aam Admi Bima Yojana scheme is available only for individuals
belonging to BPL families, rural landless households or one of the 48 specified vocational
groups. If you do not belong to any of these categories, coverage under Aam Admi Bima
Yojana would not be available for you. You can, however, avail coverage for accidental
death and disablement through personal accident policies which are available in the market.

Unorganised labour force in India

 The Indian Scenario

 Under Terms of Occupation
 Under Terms of Nature of Employment
 Under Terms of Specially Distressed Category
 Under Terms of Service Category
 Growing prominence of unorganized sector in India
 The major characteristics of the unorganized workers
 Social security measures

The Indian economy is characterised by the existence of a vast majority of informal or

unorganised labour employment. As per a survey carried out by the National Sample Survey
Organisation (NSSO) in 2009–10, the total employment in the country was of 46.5 crore
comprising around 2.8 crore in the organised and the remaining 43.7 crore workers in the
unorganised sector. Out of these workers in the unorganised sector, there are 24.6 crore
workers employed in agricultural sector, about 4.4 crore in construction work and remaining
in manufacturing and service.

The Indian Scenario

The Indian Economy is characterized by the existence of a vast majority of informal or

unorganized labour employment. As per the Economic Survey 2007-08, 93% of India’s
workforce include the self-employed and employed in unorganized sector. The Ministry of
Labour, Government of India, has categorized the unorganized labour force under four
groups in terms of Occupation, nature of employment, especially distressed categories and
service categories.

Under Terms of Occupation

  Small and marginal farmers, landless agricultural labourers, share croppers,
fishermen, those engaged in animal husbandry, beedi rolling, labelling and packing,
building and construction workers, leather workers, weavers, artisans, salt workers,
workers in brick kilns and stone quarries, workers in saw mills, oil mills, etc. come
under this category.

Under Terms of Nature of Employment

 Attached agricultural labourers, bonded labourers, migrant workers, contract and

casual labourers come under this category.

Under Terms of Specially Distressed Category

 Toddy tappers, scavengers, carriers of head loads, drivers of animal driven vehicles,
loaders and unloaders come under this category.

Under Terms of Service Category

 Midwives, Domestic workers, Fishermen and women, Barbers, Vegetable and fruit
vendors, News paper vendors etc. belong to this category.

In addition to these four categories, there exists a large section of unorganized labour force
such as cobblers, Hamals, Handicraft artisans, Handloom weavers, Lady tailors, Physically
handicapped self-employed persons, Rikshaw pullers, Auto drivers, Sericulture workers,
Carpenters, Tannery workers, Power loom workers and Urban poor.

 Though the availability of statistical information on intensity and accuracy vary

significantly, the extent of unorganized workers is significantly high among
agricultural workers, building and other construction workers and among home based
workers. According to the Economic Survey 2007-08 agricultural workers constitute
the largest segment of workers in the unorganized sector (ie. 52% of the total
workers).
 As per the National Sample Survey Organization (NSSO), 30 million workers in India
are constantly on the move (migrant labour) and 25.94 million women workforce has
been added in the labour market from the year 2000 onwards. All the more every day
13000 Indians turn 60 years and they are expected to live another average of 17years.
Unfortunately only 10% of the Indians save for old age. The tragedy is that the
 existing social security legislations cover only 8% of the total work force of 459
million in India.
 The latest report of the NSSO uploaded by the close of May 2011 about the casual
workers in India between 2004-05 and 2009-10 compared to that of the period
between 1999 – 2000 and 2004-05 very clearly shows that there is significant increase
in the number of casual workers and decline in the number of regular workers.
 This report shows a substantial shift between 1999-00 and 2009-10 in the structure of
the labour force which can be broadly divided in to self employed, regular, and casual
workers. (casual workers are employees who do not enjoy the same benefits and
security as tenured employees. All daily wage employees and some categories of
contract employees are casual labourers.)
 All these NSSO reports are clear evidences to prove that the labour market of India 
has been undergoing tremendous transformations, including  growth of informal
sector activities, deterioration in the quality of employment (in terms of job security,
terms and conditions at work), Weakening of worker organizations and collective
bargaining institutions, marked decline in social security etc. To a greater extent,
these transformation could be related to the ongoing globalization process and the
resultant efforts on the part of employers to minimize the cost of production to the
lowest levels. It is also evident that most of these outcomes are highly correlated and
mutually reinforcing. A closer analysis suggests that the growing informalisation of
labour market has been central to most of these transformations, which inter alia
highlights the utility of understanding the growth of unorganized sector in India and
its implications.
 Many thought that India’s growth could do no wrong, and took the administrative
versions and interpretations for granted. Now it comes to a point that none of these
can be taken for granted. Growth is slow, inflation is structural and structure of
employment is not enough to cater to the growing labour force.

1. How is the Scheme Working Out Currently?

The last data that was released for Aam Aadmi Yojana on March 2015, has some things
that could be highlighted:

1. The number of the new lives covered for the fiscal year was 3,275,291.
2. The claims that were paid for the FY 2014-2015 was for over 42,00 policies.
3. The amount paid out for these claims for Fy 2014-15 was Rs. 14,43,227
4. The scholarship claims were at 619985 children amounting to Rs. 41,81,
64,800.
These numbers show that this scheme is working out more for young scholars, more than a
life insurance cover for rural.

GST rate of 18% applicable for all financial services effective July 1, 2017.

Disclaimer: Premiums may vary depending upon factors like age, location and prevailing
taxes/GST.

The Aam Aadmi Bima Yojana was launched in India by LIC in order to provide social
security along with health and financial aid to the rural population of India who do not have
any access to healthcare and medicine.

1. Social Security is increasingly seen as an integral part of the development

process. It helps to create a more positive attitude not just to structural and
technological change but also the challenge of globalisation and to its potential
benefits in terms of greater efficiency and higher productivity.
2. In the last five decades, considerable progress in extension of social security
cover at both State and Central level has been made. However, a universal
social security programme for the country remains a distant goal. Improved
health care and resultant increase in longevity call for redoubled effort to plan
for and put in place appropriate institutional mechanisms and programmes to
cover a much wider population base.
3. The logical starting point is to begin with the segment which contributes most
significantly to the country’s GDP i.e. the labour force. Provisioning for social
assistance to this group will enhance their ability to contribute to the nation.
Providing the necessary material and emotional security will enhance
efficiency and productivity. The cover will enable workers to tide over periods
of unemployment, sickness, accident or death while in employment coupled
with the promise of an assured monthly income to them and their family in old
age.
4. The work-force in the country stands close to 400 million. The existing
arrangements for social security cover only 35 million. A prime concern is the
challenge of closing the existing coverage gap. This is about 90% of the
 workforce. The obvious strategy for the Tenth Five Year Plan will have to be
built around the goal of closing the coverage gap to a significant extent.
5. The impact of globalisation and the national economic reform agenda have
accelerated and forced the pace of change in the methods of production and
distribution. A clearly visible trend is contractualisation and casualisation of
labour. Relocating manufacturing bases, out-sourcing, non-core components
of businesses have radically changed the way businesses have traditionally
been run.
6. The development and implementation of an adequate response designed to
mitigate hardship for the working class in the context of the radical changes is
an overriding national imperative. Currently, social security policy makers and
administrators are engaged in a global debate to redress similar problems in
both the developed and developing countries.
7. This debate also has thrown up an argument of publicly managed social
security schemes as opposed to privately managed schemes. There are strong
argument advanced for both sides. However, there is no standard blue print
that can be adopted universally. Each country has to find an appropriate model
in their respective national context. In the Indian context a privately managed
scheme cannot be the primary vehicle for providing social security. It can at
best be considered as a supplementary scheme or the second pillar after a first
pillar mandatory scheme or schemes. In the context of no social security
provisioning being available for an overwhelming majority of the work-force,
this has to be the way forward in India.
8. An approach to the challenge of closing the coverage gap in social security
provisions has to be developed at two levels. The first level is the re-tooling of
the existing institutional arrangements for the organised sector in order to
remove existing inefficiencies, redundancies and for greatly improving service
turn around times and responsiveness to customer needs the expectations. This
can be achieved by introducing re-engineering and radical change in business
processes i.e. to improve functions of contribution collection, record-keeping
and benefit delivery. Induction of existing and emerging Information and
Communication technologies can improve handling capacity and revive
delivery geometrically.
 9. The second level is to create a legislative and administrative framework for
significant penetration of social security cover in the unorganised sector. This
issue can be addressed by partly using the existing institutional and delivery
mechanism for social security after introducing appropriate flexibility in the
legal and administrative framework and mainly through introduction of means
tested schemes which are area specific, occupation specific or industry
specific.
10. In the context of the globalisation and its impact on the labour force, it is
necessary to put in place a National Policy on Social Security for all sectors.

State Governments like Kerala, Tamil Nadu, West Bengal have introduced social security
schemes providing insurance and other benefits to the certain occupational groups in the
unorganised sector. Other states could be motivated and encouraged to formulate and
implement such schemes and programmes as per their requirements.