Microinsurance in India
How Microinsurance works
If it is the death of the family breadwinner, confronting a sudden cut in the main source of household income may seem overwhelming when you are coping with the loss emotionally. Every serious illness, every accident and every natural disaster threatens the very existence of poor people and usually leads to deeper poverty. There may be some financial matters to attend to quickly. That’s where “microinsurance “Comes in.
Microinsurance is specifically designed for the protection of low -income people, with affordable insurance products to help them cope with and recover from common risks.
Two-thirds of human beings are suffering in the most extreme poverty for whom Government aids support.
Micro-insurance is designed generally to address economic exclusion from resources, services, and/or social protection in the cases of death or disability due to the accidents, unforeseen events like Critical illnesses, ill-health requiring hospitalisation, or another adverse events affecting crops livestock/cattle’s. Natural disasters, fire, theft etc. affecting property stakes.
TYPES OF MICROINSURANCE
Life Insurance products:Term Insurance, Policy, Endowment Insurance Policy etc.
General Insurance products: Health/Accident Insurance, Cattle & Livestock Insurance, Poultry Insurance, Agriculture Insurance, Pumpset Insurance, Plantation Insurance etc.
Premium ranges from minimal of Rs 141 to Rs 290 for individuals. Cover is also provided to the family members on floater basis. Basic Insurance needs of Hospitalisation, Personal accident & Critical Illness is taken care by this products. Fire & Allied perils, Burglary & Robbery provides coverage against loss or damage of assets.
Insurers aims to provide the basis needs of the Below poverty line population by providing a simple & small Sum insured products tailor made especially for matching the needs of poor at reasonable rates.
Many other risks can be insured by microinsurance, although as with traditional insurance, some of them are more complex and therefore more difficult and expensive to cover than others. General Insurance companies are looking forward to design & include more such products in this line of business.
We can safely say that somewhere between 20,000 and 40,000 deaths occur each year due to lack of health insurance apart from loss of finances due to damage to the assets due to Fire & Burglary.
India is home to many experiments in microinsurance. There are a host of registered and non-registered microinsurance products (Rural and social products not registered as microinsurance products) in India.
Contribution to the poor group of peoples through micro insurance.
In a bid to boost the micro-insurance sector, Insurance Regulatory and Development Authority (IRDAI) have proposed to widen the product portfolio and distribution network of micro-insurance. IRDAI has proposed to allow cooperative banks, regional rural banks, primary agricultural co-operative societies to act as micro-insurance agents aiming to reach the poor & low income groups of the society.
Thus access to microinsurance by the poor and disadvantaged population can contribute significantly.