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What Is Aam Aadmi Bima Yojana (AABY)? What are the Features of Aam Aadmi Bima Yojana?

Published on Sept 15, 2020. EST READ TIME: 5 MIN   

Approximately 93% of India’s total workforce is employed in the unorganized sector. Workers belonging to such occupational groups are prone to accidents and illnesses. In the event of such an unfortunate incident, owing to a lack of health insurance , poor households are left with no financial protection. With the aim of providing social security to occupational groups within this sector, the Government of India launched the Aam Aadmi Bima Yojana (AABY) in October 2007. It covers natural or accidental death and disability of people who fall within certain occupational groups.

Features of Aam Aadmi Bima Yojana (AABY)

  • Sponsored premium: The premium charged varies from one state to another, out of which 50% is subsidized and paid from the Social Security Fund of the Government. The remaining 50% is paid by either the nodal agency,union territory, state government or central government, depending on which occupational group a beneficiary belongs to. Thus, the premium of this social security scheme is completely sponsored by the government.

  • Easy enrollment: No lengthy paperwork or complicated procedures. The enrollment process is simple and hassle-free. The beneficiaries have to just show identification proof to be enrolled for AABY.

  • Claim process: The claim process of the insurance is again very simple. All the policyholder has to do is produce the AABY card and the claim will be automatically settled.

  • Quick assistance : In case of any query, the policyholders can get in touch with the nearest LIC (Life Insurance Corporation) branch by making a call to the contact person or sending an email.

What is covered under Aam Aadmi Bima Yojana (AABY)?

  • Death due to natural causes: The scheme provides compensation to family members of the deceased. At the time of claiming, the death certificate of the policyholder has to be submitted.

  • Death due to accident: If the insured meets with a fatal accident, surviving members of the insured can claim the compensation amount. However, a medical certificate stating that the death was due to an accident is a must.

  • Partial disability or permanent total disability: If due to an unfortunate incident, the policyholder suffers a partial disability such as loss of one eye or limb or permanent total disability such as loss of both eyes andboth limbs, then AABY provides coverage of a certain amount to the family members.

What is Not Covered in this scheme?

Though the scheme is aimed at providing monetary help in case of accident and death, it comes with certain exclusions such as:

  • Death or disability from mental illness

  • Hospital expenses

  • Suicide/attempted suicide

  • Death or disability due to a war-like situation in the country

  • Participation in dangerous and adventurous sports

  • Childbirth/pregnancy

  • Loss of life or disability due to substance abuse

Eligibility Criteria

To avail the benefits of Aam Aadmi Bima Yojana, the applicant should fulfil the below criteria:

  • Age: The applicant should be between 18 years and 59 years of age.

  • Income: Should belong to rural landless household (RLH) and below poverty line (BPL) family.

  • Members: Only one member of the family is eligible. He/she should be the head of the family or the earning member.

  • Documents: Along with the application form, the applicant has to provide supporting documents such as age proof, identity proof, address proof, and income certificate.

Benefits of Aam Aadmi Bima Yojana (AABY)

  • Natural Death: If the insured dies due to natural causes during the policy period, the sum assured of INR 30,000 will be paid to the nominee or surviving members.

  • Accidental Death: Accidents come unannounced. In case of death of the policyholder due to an accident, an amount of INR 75,000 is paid to the surviving beneficiaries or family members.

  • Disability benefits: An accident can, sometimes, cause disability. If the insured suffers from permanent partial disability, he’s entitled tocoverage of INR 37,500. If the beneficiary suffers from permanent total disability, the claim amount is INR 75,000.

  • Scholarship benefits: Apart from providing death and disability benefits, the Aam Aadmi Bima Yojana also offers a scholarship of INR 100 per child per month. The scholarshipwill be given to a maximum of two children of the beneficiary studying between 9 th to 12th standard.


While low-income group households may not be able to afford health insurance, they will be able to receive financial protection with Aam Aadmi Bima Yojana (AABY). This government-sponsored social security scheme has been launched with the aim of protecting the interests of hundreds of individuals working in occupational groups within the unorganized sector. 

This  blog is written by Dr. Kavita Ganesh 
Asst. Vice President, Health & Accident Product Underwriting

About The Expert :   Dr. Kavita Ganesh holds over 15 years of work experience in health insurance industry. She highly recommends buying health insurance for securing finances in case of a medical emergency. Looking at the current pandemic situation, she enforces the idea of having a higher sum insured for covering the entire family.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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