A Comprehensive Guide on Micro-Insurance Policies

Guide to Micro-Insurance Policies

Guide to Micro-Insurance Policies

Is Micro-Insurance Becoming A Necessity – It would not be wrong to say new ideas and concepts are rare in insurance. We have hardly seen any innovation in this area for a long time. But, the modern world is changing faster than your expectations. These days, there are entirely new models of life and consumption that differ from the previous ones. Even the insurers themselves gradually have unique interests and requests. Therefore, the insurance industry can either adapt to them (banking systems, transport, delivery services, media) or lose a new, large, and promising audience. A possible innovation that has high hopes in India is micro insurance. Many of you may not have heard of microinsurance before. But you’ve probably heard of things like pay-as-you-go insurance. So, let’s learn more about micro insurance, its pros and cons, and its usability for ordinary Indians.

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A Brief Introduction To Micro-insurance

In simple words, the micro-insurance concept breaks down insurance in its traditional form into something much smaller-insurance for small items like a day trip or one-time event, or even health insurance. It is designed to help more people purchase coverage they previously couldn’t afford. Micro insurance began as a charity in the 1990s when the World Labor Organization experimented with cheap insurance policies. Now, Insurance companies have started to understand that micro insurance can bring benefits and effective tools.

Many people in India cannot afford large insurance programs against many risks. Micro insurance is a good solution for them. In such situations, insurance companies sell their products, not to individuals but whole groups united by a particular feature. It helps companies to save on administrative costs.

Generally, companies tend to sell large insurance programs to the client, including entire groups of risks that most likely they will not need coverage for. That is why micro insurance is a more flexible system. It allows people to choose the set of relevant risks and regularly pay the insurance premium. Companies calculate the premium instalments based on the probability of risks and the cost of covering them. So, micro insurance provides insurance coverage against specific perils in exchange for small regular payments. Its main features are low cost, easy underwriting, clarity and accessibility of contracts, fees, issuing a policy, and resolving disputes.

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Benefits of Taking Microinsurance

The micro insurance program aims to meet the needs of underprivileged and low-income individuals. There are many benefits of such an insurance scheme-

Simple Structure

The form and type of micro insurance are not complicated. It doesn’t use an extended and difficult-to-understand policy. Insurance policies or contracts have simple administrative functions and processes that are easy to understand. Companies can summaries such a policy in only one or two certificates. While regular (non-micro) insurance policy contracts have several papers. It usually contains general terms and conditions that are difficult to understand.


Micro insurance is always easy to get. Companies allow you to withdraw compensation at a mini market, post office, kiosk, pawnshop, village head office, community, and other locations that have been identified either in person or in groups. However, insurance claims unrelated to micro structure are usually performed in the insurance branch through an agent or broker. Furthermore, micro insurance does not require a health check in the first place. But, on the other hand, you need to go under a health checkup before applying for non-micro insurance.


economy - Micro-Insurance PolicyThis premium amount of micro insurance is very affordable. But it still depends on the amount of compensation and the type of insurance purchased. Overall, the average premium price is about four cups of fried noodles or 2-3 packs of cigarettes. In addition, micro insurance premiums are sufficient to be paid only once during the insurance period because the price is very affordable. This is because, in micro insurance, the amount of insurance premiums and compensations almost remains the same for each insured person. But in non-micro insurance, premiums and insurance coverage depend on the ability and demand of the people.

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Swift Processing & Releasing of Money

Everything happens fast when you apply for micro insurance. The company processes your application quickly and gives a swift response when you need to withdraw the money. Once you submit your request and complete documentation, you can get funds in a maximum of 10 days. Low-income people in India usually do not have enough savings, and they quickly need funds in the event of a natural disaster. Remember that companies take 30 days to accept general insurance claims.

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Who Uses Micro Insurance In India?

Micro insurance is currently having some success in India and many developing countries as a way for low-income families to afford insurance, especially health insurance. It can enter your life in many ways; through licensed insurance agents, public organizations, microfinance organizations, and other non-governmental organizations. In addition, many people in India choose micro insurance to protect themselves during unfavorable situations and disasters.

Different Types of Micro Insurance Policies:

Micro insurance Policies Coverage and Benefits

Endowment/Pension Micro insurance – It offers survival and death benefits to insured people. Pension allowance makes this popular among a large number of individuals.
Term Micro insurance – It offers accidental and permanent disability benefits.
Health Micro-insurance – It allows you to cover pre-and post-hospitalization expenses & other medical bills. In addition, you can choose health insurance for employees and enable them to cover small medical bills comfortably.
Property Micro insurance – It covers damages to your property caused by theft or natural disasters.

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Choosing The Best Micro Insurance Policy For Yourself:

Many companies and organizations in India offer micro insurance policies. They all claim to be the best service provider in the market, outlining their features aggressively. So, how to choose the best micro insurance policy for yourself? Let’s see the below-mentioned points:

Determine The Goals of Your Micro insurance

The goal of an insurance policy is changed from one person to another. Before taking a micro insurance policy, you must enquire about its purpose, terms and conditions, maturity date, premium amount, and benefits. There is no benefit of choosing the wrong insurance policy as it will probably not benefit you during unfavorable times.

For example- if you want to have financial freedom after retirement from service, choose endowment/Pension Micro insurance. Similarly, if you’re going to protect yourself from accidents and natural calamities, taking term micro insurance is quite helpful. There are many ordinary Indians who cannot differentiate between two insurance policies. They must get recommendations from industry experts and make intelligent decisions.

Look For The Best Insurance Cover

Looking for the best micro insurance cover is not an easy task at all, as considered by a good number of individuals. Due to the growing popularity of micro insurance in India, many companies have started offering attractive plans and packages. Before taking any particular micro insurance, attentively estimate your yearly income and expenses. Think of how much money you have left in your bank account to invest in insurance premiums. In India, people often take an insurance policy without doing proper research and analysis work. In several cases, they choose the wrong insurance policies beyond their financial capabilities.

As a result, they face problems paying insurance premiums and default on the EMI payment many times. Persistent inability to make the insurance premium at the right time leads to the termination of the insurance policy itself. Evaluate your finances very well and look at different insurance policies and their benefits in great detail. Determine how a particular micro-insurance policy meets your requirement in the best possible way. Proper search, analysis, and scrutiny of terms and conditions of different micro-insurance policies help choose what is best for you.

Choosing The Reliable Insurance Provider

It is essential to choose the best insurance company to take a suitable life Insurance policy. The Indian market is full of options when you start looking for companies that offer insurance policies. All countries claim themselves as the best service provider and use aggressive marketing strategies to attract many customers. Therefore, you need to study the offers companies make. For example- Many companies offer cheap health insurance in India. But their terms and conditions, insurance amount, benefits, tenure, and other things differ from each other.

Therefore, an insurance policy that is suitable for one person may not meet your expectation in any way. That is why you must inquire about different insurance companies as far as possible. Browse their websites and check essential details like the company establishment date, license from regulatory authorities, service period, customer base, people’s opinion about the company, etc. All this will help you choose a reliable service provider & the best micro-insurance policy for yourself.

Read The Policy Document

policy documentsTaking a micro insurance policy is an important responsibility that determines the use of your hard-earned money and the benefits you get at the end of your tenure. All individuals need to understand all the terms and conditions of the micro insurance policy they have taken. Companies mention everything about a particular insurance policy in insurance papers. Go through the document carefully and understand all the terms and conditions mentioned. India’s insurance documents are primarily available in English, Hindi, and other regional languages. Take the help of an insurance advisor if you face difficulties understanding any particular term and condition of the Micro insurance agreement. Vigilance and questioning prevent you from agreeing on the wrong insurance paper.

A Candid Evaluation of Life Insurance Needs

From time to time, the priority of people’s lives changes. Important events like marriage, childbirth, natural calamities, death of a relative may force you to redesign your needs for micro insurance. Therefore, you must evaluate the relevance of the taken insurance policy and look for all possibilities of adjustment. It will help you to ensure the availability of sufficient funds during unexpected emergencies.

Taking Micro insurance At An Early Age,

Many factors accept the terms and conditions of micro insurance policies, such as your age, occupation, income, insurance scheme amount, etc. We never know when unfortunate incidents will strike us and at what time. Individuals with insurance cover feel relaxed as they don’t have to worry about finances after a medical ailment, natural calamities, death, or any other risks. Taking insurance in the early stages of your life helps you a lot. Cheap health insurance in India is available for people from different age groups. The earlier you take it, the more benefits you enjoy.

The Number of People

peopleThe total number of folks required to be insured will affect the insurance amount, premium installments, terms and conditions, and other related things. Therefore, you must have a face-to-face conversation with the insurance advisor and tell him your requirements. He will look for the best micro-insurance policy as per your instructions.

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The Future of Micro-insurance In India

Today, 500 million people worldwide are covered by micro insurance services. As per a survey, It is believed that the micro insurance market will grow to 1 billion policyholders in the next decade. If you talk about the future of micro insurance in India, it’s bright and promising. Currently, India is a country with 1.3 billion people. The demand for micro insurance policies in our country will increase in the coming years because of the growing population, inflation, costly medical expenses, etc.


Everyone understands the importance of taking insurance policies. Taking the right insurance policy will offer you financial help during unfavorable situations. Even today, despite lofty claims of India’s overall development, many Indians cannot take traditional life insurance policies. For them, micro insurance is a boon. You need only a few resources to take micro-insurance and pay its premiums.

Easy terms and conditions, swift processing, the quick release of money to policyholders are the main features of microinsurance policies. If you belong to an economically challenged category of Indian society, take an appropriate micro-insurance policy without making any unnecessary delay. It will help arrange the much-needed funds during emergencies and prevent you from begging for financial help. Moreover, loan protection insurance will prevent you from defaulting on the loan.

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