Government-Backed Insurance Schemes for India’s Low-Income Households

India is on the road to becoming a developed nation by 2047, but to turn that vision into reality, every citizen, from metro cities to the smallest villages, must be part of the journey towards development. Development isn't just about infrastructure and technological advancement, it’s also about ensuring financial security, social protection, and economic inclusion for people across all sections of society.

Why Is Insurance Crucial For Low-Income Families?

For families living below the poverty line, a sudden medical emergency, accident, or the unexpected death of a breadwinner doesn’t just cause emotional pain but also wipes out years of savings, pushes households into debt, and makes it even harder to meet daily needs, worsening their overall living conditions.

Insurance acts as a safety net that protects their financial stability during harsh times. But how can someone who struggles to meet basic needs afford to pay high insurance premiums? 

That's why the Government of India offers several insurance schemes specially designed for low-income groups at subsidised rates or even free of cost, yet 90% of India's poorest don't have insurance. This is mostly due to a lack of awareness.

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Government Backed Insurance Scheme For Low Income Families

A. Health Insurance

1. Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (PM-JAY)

Ayushman Bharat (PM-JAY) is one of the world’s largest government-funded health insurance programs. It offers free health insurance coverage of up to ₹5 lakh per family every year. This enables low-income households to access secondary and tertiary medical care without worrying about hospital bills. The scheme is specifically for economically weaker sections identified through the Socio-Economic Caste Census (SECC) 2011. It covers hospitalisation in enlisted public and private hospitals, including surgeries, ICU care, diagnostics, and post-hospitalisation treatment with no restrictions on family size or age.

To check if you're eligible, you can visit the official website pmjay.gov.in and use the "Am I Eligible" tool. Enrolment can be done at the nearest Ayushman Bharat kiosk, CSC (Common Service Centre), or selected government hospitals by submitting your Aadhaar card or ration card.

2. Employees’ State Insurance Scheme (ESIS)

The Employees’ State Insurance (ESI) Scheme is a government-backed social security program managed by the Employees' State Insurance Corporation (ESIC) under the Ministry of Labour and Employment. Factories or establishments having 10 or more workers (20 in some states) earning maximum of  ₹21,000 per month  or ₹25000 per month for those with disabilities need to mandatorily register under the scheme. The scheme is funded jointly by employers (3.25% of wages) and employees (0.75% of wages). Those earning less than ₹176 per day are exempted from paying their share. With over 8 crore beneficiaries across India, ESI ensures quality healthcare and income support to workers and their families during times of need.

Benefits of ESIS

✅ Healthcare – Provides full medical care to the insured and their family members.

✅ Sickness – Offers compensation during certified medical leave.

✅ Maternity – Covers expenses and provides paid leave during maternity.

✅ Disability – Grants financial support for temporary or permanent disability due to work-related injuries.

✅ Dependents – Offers monthly pensions to dependents in case of insured’s death due to employment injury.

✅ Rehabilitation – Includes vocational training and physical rehabilitation after injury.

✅ Aids – Provides medical aids like hearing aids, wheelchairs, and artificial limbs.

3.  The Universal Health Insurance Scheme (UHIS) 

The Universal Health Insurance Scheme (UHIS) was primarily introduced by the Government of India to extend affordable health coverage to economically weaker sections of society. It offers annual coverage of up to ₹30,000 for hospitalization to every family, along with maternity benefits and ₹25,000 accident cover for the primary earner. BPL families can enroll at highly subsidized premiums, starting from just ₹100 per year.

B. Life Insurance

1. Aam Aadmi Bima Yojana (AABY)

Earlier known as Janashree Bima Yojana, the Aam Aadmi Bima Yojana (AABY) is a social security insurance scheme for unorganized workers and rural landless households.  The annual premium for this particular scheme is Rs. 200 out of which 50% i.e Rs. 100 is paid by the central Government. One can register for the scheme offline by visiting LIC office or online through the LIC website or the National Portal of India. The sum assured is as follows

• In case of natural death - Rs 30,000
• In case of accidental death - Rs. 750000
• In case of partial disability (loss of one limb/eye) - Rs. 37500
• In case of total disability (loss of both limbs/eyes) - Rs. 75000

The scheme also includes scholarship benefits for a maximum of two children per family.

2. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) is a renewable term life insurance offered by the Government of India for a tenure of 1 year. Anyone aged between 18-50 years and has a bank account can apply for this scheme. The annual premium for this policy is ₹436, which is auto debited from the registered bank account.  One can enroll through their bank or post office by filling the form. The nominee is entitled to receive a sum assured of Rs 2 lakhs on the demise of the insured.

3. Pradhan Mantri Jan-Dhan Yojana (PMJDY) 

Pradhan Mantri Jan-Dhan Yojana (PMJDY) is a financial programme introduced in 2014 to encourage people across India to open a zero-balance bank account. But many people are unaware of the free life insurance element attached to it. PMJDY provides a life insurance cover of Rs. 30,000 (only for the head earning member of the family) if they opened a bank account for the first time between the duration 15/8/14 -26/1/15. Additionally, an accidental cover of Rs 2 lakhs is also available for RuPay cardholders under this scheme.

Here"s a quick recap of all key elements from different schemes discussed above

Scheme Name	Type	Coverage/ Benefits	Eligibility	Premium (Annual)	How to Enroll
Ayushman Bharat – PM-JAY	Health	₹5 lakh per family/year (hospitalisation, surgery, ICU, diagnostics)	Economically weaker households (SECC 2011 data)	Free	CSCs, listed hospitals, or pmjay.gov.in
Employees  State Insurance Scheme (ESIS)	Health + Social security	Full medical care, sickness cash benefit, maternity leave, disability cover, pension, funeral aid	Employees earning up to ₹21,000/month in covered establishments	Shared: Employer 3.25%, Employee 0.75% of monthly wages	Through employer at time of joining or ESIC portaL
Universal Health Insurance Scheme (UHIS)	Health	₹30,000 for hospitalisation + ₹25,000 accident cover	BPL and low-income families	₹100–₹200 for BPL	Public insurer branches
Aam Aadmi Bima Yojana (AABY)	Life	₹30,000 (natural death), ₹75,000 (accident), ₹37,500–₹75,000 (disability) + scholarships	Unorganised workers, rural landless (18–59 years)	₹200 (₹100 paid by Govt.)	LIC office, LIC website, or National Portal
PM Jeevan Jyoti Bima Yojana (PMJJBY)	Life	₹2 lakh on death (any cause)	Bank/post office account holders aged 18–50	₹436	Through bank/post office
PM Jan-Dhan Yojana (PMJDY)	Life + Accidental	₹30,000 life cover (for accounts opened 15 Aug 2014 – 26 Jan 2015) + ₹2 lakh accident cover (RuPay card holders)	Zero-balance account holders under PMJDY	Free	Open PMJDY account at bank or via Bank Mitra

Providing insurance to low-income families not only offers financial protection, but also empowers them to shift their focus from survival to growth. When the fear of unexpected medical bills or loss of income is reduced, families start planning for a better future, invest in education, improve livelihoods, and break out of the cycle of poverty.

While the government has taken commendable steps to make insurance accessible and affordable, the real change begins when awareness reaches every citizen. And here’s how you can help - if you found this blog helpful, take a moment to share it with someone who might benefit. A small step from your side could help a family find financial security in times of crisis.

Frequently Asked Questions (FAQ)

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1. Who is eligible for Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (PM-JAY)?

PM-JAY is available to families identified as economically weaker sections based on the Socio-Economic Caste Census (SECC) 2011. There is no cap on family size or age, and pre-existing conditions are covered from day one.

2. What documents are needed to enroll in these schemes?

Generally, you need an Aadhaar card, age proof, bank account details, and an income/occupation certificate for health and life insurance schemes.

3.  Are these schemes available in all states?

Yes, these schemes are implemented nationwide, though some state-specific changes in schemes may also exist. Coverage and enrolment processes are similar across India.

4. How do I make a claim under these insurance schemes?

For health insurance, you can present the card of the scheme you are enrolled in at the listed hospitals.  For life insurance, the nominee can make a claim at the LIC office or bank branch where the insured had their account linked with the scheme and submit all the required documents.

5. What is the difference between regular health insurance and government health insurance schemes?

Regular health insurance is available to all income groups, offers higher coverage (up to ₹1 crore), and usually has higher premiums. Government schemes are designed for low-income families, offer coverage up to ₹5 lakh, and are either free or have minimal premiums. Government schemes may have limited hospital room options and are usually available at both public and selected private hospitals.