Micro-Insurance: Financial Security Even on A Limited Income
Insurance is important for everyone’s financial security as it protects you from unexpected events such as accidents, illnesses or death. However, not everyone can afford the premium that is required to provide adequate coverage, especially as the policy can last for years.
The good news is that insurers can also offer micro-insurance for those who cannot afford traditional life insurance.
What Is Micro-Insurance?
Micro-insurance is a form of insurance that is specifically designed to provide coverage to low-income families. It offers smaller coverage amounts and shorter policy durations, at a much lower cost than traditional life insurance policies. To help you manage and recover from unexpected financial losses caused by illness or accidents or save systematically for your upcoming financial goals such as your children’s education or business purchases. By making insurance affordable and accessible, micro-insurance can make you financially stable to better manage your resources and achieve your aspirations.
Types of micro-insurance: Life and Nonlife There are 2 types of micro-insurance:
Health insurance, personal accidents, and assets such as livestock, house, machinery or equipment, agricultural produce, etc are some examples of micro-insurance. You can purchase this as an individual or even via group-based insurance.
Term plan and endowment plan are two types of micro-insurance products in this category.
Benefits of micro -insurance: Start small, save big
Affordable coverage: The low premium makes it viable even for individuals without retirement savings or low-wage earners to be covered.
Need-based: The plans are tailored to cover specific risks such as illness, injury, or death, as well as assets such as livestock or small businesses.
Promotes financial inclusivity: By offering protection to a segment of society that cannot afford traditional insurance, micro insurance makes insurance accessible and affordable.
Easily accessible: Micro-insurance policies, are distributed via Non-governmental Organizations (NGOs), Self-help Groups, and Micro-finance Institutions.
Creates a positive mindset: By making financial security affordable, micro-insurance empowers low-income earners to financially secure their family’s future.
Tax benefits:The premiums paid, and pay-outs are exempted from tax.
Before taking a micro-insurance plan, it is advisable to speak with a financial advisor or insurance agent to determine which product is best suited for your unique situation. IndiaFirst Life, a life insurance company, has customised its micro life insurance products to better suit its customers’ needs.
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