What is micro-insurance?

What is micro-insurance?

Microinsurance is one of the many ways in which the lower sections of the society which are deprived of even the basic needs of their families, are protected for the perils they can encounter. This is done by providing them protection inform of insurance cover where the regular premium is very low and is proportionate to the risk and its cost involved.
This arrangement is being made so that every section of the society can be adequately insured according to their living expenses and which can be insured by paying very small amount of premiums.
Microisnurance provides greater economic and psychological security to the poor as it reduces the exposure to multiple risks and cushions the impact of the disaster.
There is an overwhelming demand  for social protection among the poor

Microinsurance in conjunction with microsavings and micro credit would therefore go a long way in keeping this segment away from the poverty trap and would truly be an integral component of financial inclusion.

Microinsurance is synonymous to community-based financing arrangements, including community health funds, mutual health organizations, rural health insurance, revolving drugs funds, and community involvement in user-fee management. Most community financing schemes have evolved in the context of severe economic constraints, political instability, and lack of good governance. The common feature within all, is the active involvement of the community in revenue collection, pooling, resource allocation and, frequently, service provision.