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What is Aam Aadmi Bima Yojana?

Aam Aadmi Bima Yojana is a government sponsored social security scheme that offers life cover to the sole earning members of families below poverty line as well as rural households with no land. Coverage is provided against permanent total or partial disability as well as accidental and natural death.  The Central and State governments share the annual premium of Rs. 200 per person equally. This saves the insured the money towards payment of the premium.

The AABY scheme was launched in October 2007, primarily to provide financial assistance to the rural poor with little or no access to basic services such as hospitals and pharmacies. This socially inclusive scheme covers those who fall below the poverty line and supports their families in the event of death or disability of the insured.

Features of the AABY Scheme

● Sponsored Premiums:

The premiums of the scheme vary across states in India. However, 50% of the premium amount is subsidised and paid by the government from the Social Security Fund. The remaining amount is paid by the nodal agency, union territory, State Government, or Central Government. This depends on the insured’s occupation. In short, the AABY is a government-funded scheme.

● Easy Enrolment:

The enrolment process for AABY is quick and involves minimal paperwork. The beneficiaries have to provide proof of identification at the time of enrolment.

● Hassle-Free Claim Process:

Along with easy enrolment, raising claims against the scheme is hassle-free as well. The beneficiaries have to provide the AABY card for submitting and settling the claim application.

●  Quick Assistance:

Insured and their beneficiaries can get in touch with the nearest Life Insurance Corporation (LIC) branch for quick assistance.

Benefits of the AABY Scheme

The scheme provides the following benefits.

● Natural Death:

The surviving beneficiaries of the insured receive a death benefit of Rs. 30,000 (in the event of natural death).

● Accidental Death or Permanent Disability due to Accident:

Rs. 75,000 (in case of accidental death or permanent disablement in an accident).

● Partial Disability due to Accident:

Rs. 37,500 (in case of accidental partial permanent disability).

● Scholarship Benefits:

A maximum of two children of the insured can avail scholarship benefits under the AABY Scheme. They should be studying between 9th and 12th standard and receive Rs. 100 per month and paid on a biannual basis.

What is covered in Aam Aadmi Bima Yojana?

The AABY scheme covers the following things:

● Natural Death:

The scheme provides a death benefit to the beneficiaries of the insured in case they die a natural death. At the time of claim settlement, the beneficiaries have to submit the death certificate of the insured as proof.

● Death in an Accident:

In case the insured dies in an accident, the beneficiaries receive the death benefit. As proof, the beneficiaries have to submit a medical certificate stating that the death was due to an accident.

● Partial Disability or Permanent Total Disability:

If the insured suffers from disablement (partial or permanent) due to an accident, they will receive a certain amount as compensation from the AABY scheme.

What is not covered in Aam Aadmi Bima Yojana?

Much like any other insurance scheme, AABY has certain limitations. These include:

  • Death or disablement due to mental illnesses
  • Death due to self-inflicting injuries
  • Hospitalisation expenses
  • Death or disablement due to war-like conditions in India
  • Participation in dangerous activities
  • Death due to substance abuse

Aam Aadmi Bima Yojana Premium

As stated earlier, the AABY scheme is completely funded by the government. However, the premiums are very low – Rs. 200 per beneficiary. The Social Security Fund of the Indian government pays 50% of the premium amount. The remaining 50% is paid by the State or Central Government, or Union Territory. In case the applicant is recognised under the vocational groups, the remaining 50% is paid by the nodal agency, State/Central Government, Union Territory, or the applicant.

Now let us understand the eligibility criteria and documents needed to apply for the AABY Scheme. The following table gives the walkthrough of the same.

Eligibility Criteria for AABY

The applicant should fulfil the following eligibility criteria for AABY.

● Age: The applicant’s age must be between 18 years and 59 years

● Income: The applicant should belong to a rural landless household (RLH) or below the poverty line (BPL)

● Members: The immediate family members of the applicant will be covered under the scheme

Documents Needed for AABY

The applicants need the following documents for the AABY scheme:

  • Ration card
  • Birth registration proof
  • School certificate
  • Voter Card
  • Aadhar card

Identity card issued by a recognised company or government department

How to Raise Claims on Aam Aadmi Bima Yojana?

The P&GS unit of LIC manages the claim requests for the AABY scheme. When the claim is processed, payment is either made through NEFT or the amount transferred directly into the bank account of the beneficiary. LIC can also make payment through a A/C payee check or any other mode that it finds suitable. 

The applicants can raise three types of claim requests. We’ve explained these in detail below.

Claim Process for Natural or Accidental Deaths

  1. The nominee needs to fill the Aam Admi Bima Yojana death claim form and apply for claim if the insured dies when the policy is in effect.
  2. The application along with a death certificate should be submitted to the concerned Nodal Agency officer.
  3. The submitted claim papers undergo a verification process by the officer assigned as per the particular Nodal Agency.
  4. The documents, Aam admi bima yojana death claim form, death certificate as well as a certificate declaring that the insured member who was the head or earning member of the family falls under BPL or marginally above BPL family is to be submitted by the officer.
  5. It is important that the duly completed claim form as well the death certificate in original with a duly attested copy is submitted by the Nodal Agency along with the Aam admi bima yojana death claim form.

Claim Process for Accidental Disability

To register a claim for the death of the person insured under Aam Aadmi Yojana the following documents need to be submitted by the beneficiary along with the Death Registration Certificate:

  • Copy of FIR
  • Postmortem report
  • Police inquest report
  • Police conclusion report or final report

Claim Process for Scholarship Benefit

  1. The child of the Aam Aadmi Yojana member who is eligible for a scholarship needs to fill up an application form on a half-yearly basis and submit it to the nodal agency.
  2. The Nodal agency then identifies and verifies the students and submits the list to the applicable P&GS unit with their full details.
  3. These include the name of the student, school, class number, member’s name, master policy number, membership number and NEFT details.
  4. Every year on July 1 and January 1, the scholarship payment amount is credited by LIC to the Account of the beneficiary student either by NEFT or directly into the bank account.

Implementation of the AABY Scheme So Far

As per the March 2015 data released by the government, the AABY scheme has said to cover over 32.75 Lakh people under it. A few other stats to know are as follows:

  • Over Rs. 14.43 Lakhs were paid in claim settlement in the FY 2014-15.
  • Over 6.20 Lakh students avail more than Rs. 41.81 Crores in the AABY scholarship benefit.


The Aam Aadmi Bima Yojana is a government-funded scheme with a very low premium rate. It aims to provide future financial stability to the dependent members of the insured, especially if they are the sole earning member. With this and many other government schemes, the standard of living of the rural population is expected to improve and contribute to the growth of the Indian economy.

Furthermore, this promotes the necessity of having a basic term insurance plan. Whether you are eligible for AABY or not, get a term insurance plan to provide future financial security to your loved ones. The term insurance plans available on Finserv MARKETS provide benefits such as extensive coverage, rider benefits, affordable premiums, and more.

You can read more about the term insurance benefits and other government schemes by visiting Finserv MARKETS.


  • ✔️What is the objective of the Aam Aadmi Bima Yojana?

    The AABY Scheme aims to provide financial security to the rural population of India, especially if the families have a sole earning member. The objective of the scheme is to provide social security to low-income families and support them in the future.

  • ✔️Does the Aam Aadmi Bima Yojana Scheme need nomination?

    Yes. Much like any other life insurance product in India, the AABY Scheme requires the insured to mention nominees. These beneficiaries are the ones who avail the benefits of the scheme and can raise claims after the death of the insured.

  • ✔️Do I have to pay premiums in Aam Aadmi Bima Yojana?

    The insured has to pay 50% of the premium amount, which is Rs. 100 only if they belong to the Below Poverty Line (BPL). However, if the insured belongs to the rural landless households or identified vocational groups, they do not need to pay any premiums.

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