Life Insurance: Central life insurance schemes likely to merge

The government is planning to merge two centrally-sponsored life insurance schemes — Janashree Bima Yojana (JBY) and Aam Aadmi Bima Yojana (AABY) — in a bid to streamline expenditure and effectively allocate resources to ensure better delivery of the schemes.

A Cabinet note on the merged scheme, to be called Aam Aadmi Janashree Bima Yojana, has already been circulated among the concerned departments last month, official sources said.

The move comes eight months after the former chief economic advisor to the finance minister, Kaushik Basu, in the Economic Survey 2011-12 said many schemes including JBY and AABY need convergence as there are “significant overlaps and they cater to same or similar categories of population.

The convergence of such schemes will lead to better management and allocation of the funds, the official said while adding that it will also ensure that budgetary allocations yields results.

“This is a move towards a social security system for everyone in the country.

This is being done because the clientele is same for the two schemes and it is a huge management cost for the government. The merger will lead to huge savings,” the official added.

The two schemes, implemented through the LIC cater to rural and urban poors.

The JBY was launched in 2000, aimed at rural and urban poor persons, aged between 18 and 59 years, while AABY was launched in 2007, for cover against natural, accidental and disability of the head of the family of rural landless households in the country.