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Micro Insurance for Rural India
[Posted by: InsuringIndia Blog on 18-Apr-2016]
Globalization and aspirations for a better life have escalated the costs and risks for everything resulting in a rise in the demand for insurance. While insurance sector has penetrated urban India in a big way, efforts are afoot to also make a mark in the rural sector. This is being done via various policies one of which is micro insurance which attempts to provide a risk cover for all basics in rural segment like coverage for weather, cattle/livestock and insurance for dwellings/hutments.
Micro insurance as the name suggests, means insurance for small sums assured and therefore small premiums. As these policies are affordable, they become within the reach of lower income groups, for which they have been specifically designed. Micro insurance comes as a boon for such people, especially those in rural areas whose livelihood is dependent on agriculture and therefore the vagaries of nature.
Anyone within the age bracket of 18-55 years.
Agricultural labourers, construction workers, and persons employed in any aspect of agriculture.
Low income groups who may not have access to banking and other financial institutions.
Those living in rural areas that are remote and who suffer hardships.
Those who face greater hardships in their livelihoods, life in rural areas as compared to their wealthier urban counterparts.
Those who may be illiterate and unaware of insurance plans.
The types of micro insurance that are useful for people engaged in agriculture would include:
Tractor / Commercial Vehicle Insurance: This type of policy takes care of one of the most essential and vital implements in the farming sector—the tractor. Many policies also offer personal accident cover and third party liability cover under this. It means that bodily injury sustained during an accident, or accident involving other people and even the vehicle is covered. In the event of a theft, burglary, natural calamity like a fire outbreak/earthquake/storm/hurricane/cyclone etc., the tractor is covered. 
Weather Insurance: This type of cover is taken largely for crops. In India, agriculture is highly dependent and impacted positively or negatively by climate change and natural phenomena. These include earthquakes, cyclones, hurricane, unseasonal rain, droughts, weak or robust monsoon and also floods. Therefore weather insurance comes as a welcome relief to farmers.
Cattle insurance: Another important aspect of rural life is cattle or livestock. This type of cover takes into account the age of the cattle, value of the animal. It provides compensation in case the cattle suffers from unnatural death, disease, disability or accident. It covers cows, buffaloes, calves, bulls and bullocks.
Insurance for dwelling/ Hutment: This type of policy is also known as an asset micro insurance policy. It covers loss or damage to buildings and its contents, personal belongings due to fire or natural causes. These include cyclones, typhoons, hailstorm, flood, damage caused by excessive rain, etc. Other unforeseeable mishaps like an explosion, bursting of water tanks, impact suffered by a rail/road accident are also covered. Theft, burglary, damages caused to items and valuables inside the hutment/dwelling are also covered. In fact this policy also provides a hospitalization cover and a disability cover.

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*This is based on the difference between the highest and lowest premium's for a single person, age 25, looking for an individual health policy with the sum insured of Rs. 5 lakhs.
**This is based on the difference between the highest and lowest premium's for a single person, age 25, looking for a term plan, with the sum insured of Rs. 30 lakhs, and the premium paying term of 30 years.
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