Micro-insurance is a low-cost insurance model designed specifically for low-income individuals, daily-wage workers, farmers, small shop owners, laborers, and underserved communities. Its purpose is to provide financial protection against unexpected risks such as illness, accidents, crop loss, disability, or death — without heavy premiums or complex policies.
Micro-Insurance is Important
Low-income families are the most vulnerable because they:
Have no savings reserves
Face higher financial risk
Cannot afford traditional insurance
Often fall into loan traps during emergencies
Micro-insurance becomes a safety shield so that a single crisis (illness, accident, disaster) does not destroy their entire future.
Target Audience.
Category
Examples
Daily earners
Laborers, drivers, domestic workers, carpenters
Farmers / Fishermen
Crop-related risks, weather disasters
Small businesses
Shopkeepers, hawkers, street vendors
Low-income families
Widows, elderly, rural poor
Migrant workers
Without formal financial systems
Types of Micro-Insurance Policies
Type
What it Covers
Health Micro-Insurance
Hospital bills, medicines, surgery, maternity
Life Micro-Insurance
Financial support after death of earning member
Crop / Weather Insurance
Flood, drought, crop failure
Accident Insurance
Disability, injury, accidental death
Livestock Insurance
Loss of animals (for farmers)
Property Micro-Insurance
Huts, shops, and household items
Key Features
Feature
Benefit to Poor Families
Very low premium
Affordable even for daily-wage earners
Small but useful coverage
Enough to survive emergencies
Easy claim process
No heavy paperwork
Community or NGO-based distribution
Easy to reach villages
Flexible payment cycles
Weekly or monthly micro-payment options
How It Works (Simple Flow)
Customer buys a micro policy (Rs. 50 – Rs. 500 per year for example)
Insurance covers specific risks
If an incident happens, the customer submits a small claim
