Micro insurance, also called microinsurance, is a term for insurance goods and services that are made to meet the needs of people with low incomes or few resources in poor countries. Its goal is to offer financial insurance against certain risks at a price that most people can pay.
Micro insurance policies are different from standard insurance policies because they have lower rates, easier underwriting, and less coverage. They are made to deal with the health risks, crop fails, natural disasters, or accidents that people in sensitive socioeconomic situations face.
Most microinsurance covers things that could cause the covered person or their family to have trouble paying their bills. Some of these things could be illness, injury, death, damage to property, or the loss of a way to make a living. The service is often very basic, but it can be very important in keeping people from going deeper into poverty when bad things happen.
Most of the time, different methods are used to get microinsurance goods to the right people. This can be done through agreements with microfinance institutions, NGOs, community-based organizations, cooperatives, or cell network providers. The use of technology, such as mobile phones and digital platforms, has made micro insurance much easier to get and easier to grow.
Microinsurance helps more than just the people who buy policies. It can help reduce poverty by making the financial effects of unexpected events less severe, making risk management better, and getting more people involved in the financial system. By giving people and families a safety net, microinsurance helps them stay stable and start over after something bad happens.
Microinsurance is now seen as a key tool for growth that benefits everyone, and governments, foreign groups, and insurance companies all back it. Initiatives and agreements have been set up to develop and grow micro insurance markets, so that people with low incomes can get insurance that is cheap and useful.
It’s important to note that microinsurance is a changing field, and there are ongoing talks and attempts to make it work better, cover more people, and help microinsurance companies make more money.