What Does Microinsurance Mean?

As its name suggests, microinsurance is a type of insurance product typically created for those families who have low incomes. The coverage usually involves only a smaller amount of money. This means that one has to pay smaller monthly instalments for the insurance, and therefore the coverage that he or she gets is also smaller.

However, microinsurance schemes seem to be the best option for those who do not have much savings and/or high incomes, but who still want to have some kind of protection. This insurance type can provide them with coverage against illnesses, injuries or coverage in case of death. Moreover, some assets with lower value are also insured.

Microinsurance Explained

Being a part of the so-called ‘microfinance’ developed especially to aid poor people and families, microinsurance also intends to help such people by providing them with insurance schemes shaped to their needs.

Microinsurance is a common practice primarily in developing countries. The reason why these insurance types are set in those regions is that the existing insurance markets simply do not work there or do not fit people’s needs. So people pay smaller premiums for microinsurances, and get a lower coverage value than the typical insurance provides.