An unexpected event, such as an accident, sickness, or a natural disaster, may cause significant financial stress on a person with a low income. Although the traditional form of insurance is sometimes very expensive and complicated, micro insurance has presented itself as a cheaper and easier-to-understand solution to the people who most need it.
How does microinsurance work, and what does it actually mean?
Keep reading, as we’ll pour in the highly informative content related to microinsurance in Pakistan!
What is Microinsurance?
Microinsurance is a kind of insurance that targets low-income families and individuals. It provides coverage to the ordinary risks such as getting sick, poor yield, the destruction of property or death through accident at a very cheap amount.
Compared to the same insurance coverage in a conventional insurance policy with its high premium payments and extensive paperwork, micro insurance is designed to be simple, cheap, and easy to interpret.
Types of Micro Insurance
The service of micro insurance can be customized by the needs of various individuals and communities. Some of the most popular kinds are the following:
1. Health Micro Insurance
It is the type that provides coverage for basic healthcare services. It assists individuals to afford doctor, hospital, medicine and sometimes surgery expenses. In regions with underprivileged access to public health services, health microinsurance comes in handy.
2. Micro Insurance for Life
Life micro insurance makes a payout to the family in case a person under insurance dies. It assists in taking care of the burial expenses or in funding the left-out relatives. This kind of insurance makes sure that no loved ones are left in debt and struggling after a loss has occurred.
3. Crop/Agriculture Micro Insurance
Developed to suit farmers, this insurance provides cover against loss of crop under any kind of natural disaster, which may be associated with drought, floods, or pest attacks. It makes sure that farmers are able to rebound and come back to farming even in the case of a bad season.
4. Property Micro Insurance
This includes damage or destruction of small houses, shops, or personal property through fire, floods, or theft. It assists people to reaffirm their lives promptly without any external assistance.
5. Micro Insurance Disability or Accident
In the case of an accident or disability, the insurance pays either in a lump sum or periodically. Specifically, it is desirable for people whose primary means of making money is physical work or daily labor.
Advantages of Micro Insurance in Pakistan
There are a number of advantages that make microinsurance an necessary tool in securing finances among people and their families with low income. And what are some of those advantages? Let us look at them:
1. Affordability
Micro insurance is made and priced very cheaply. The premiums are only a few rupees per month or dollars so they are affordable to even those persons with low income.
2. Accessibility
Such kinds of insurance are usually sold or promoted by local institutions, non-profit groups, or mobile apps. This ensures that individuals living on the periphery or in rural regions find it simpler to have coverage.
3. Fast Settlement
Since the amount covered is not huge, there is a high likelihood of claims being processed in a short time as compared to the traditional type of insurance. It is significant to individuals who want ready assistance following a surprise incident.
4. Mind at Ease
It is possible to get some security even with a minor insurance policy. People can live without much fear and stress when they know that they have some cover in the face of sudden events.
5. Improved Livelihood
By mitigating financial jolts caused by accident, illness or catastrophe, micro insurance enables individuals to persevere through the loss of employment or loss of their business. This results in economic stability and overall rise in living standard.
How Does Microinsurance Work?
It is easy to know how microinsurance works. The step-by-step explanation is as below:
1. Buy a Policy
People can purchase the micro insurance either with the agents of microinsurance in Pakistan or partner banks. The policy is accompanied by a clear distinction of the coverage, its cost of the premium and the claim procedure.
2. Paying Premiums
Most plans pay on a monthly, quarterly, and yearly basis. The premium amount sizes are very small, such that low-income families will be able to afford them. Flexibility includes the payment through mobile or deduction of certain details from bank accounts according to some of the policies.
3. Coverage Period
An established duration of time in which the policy is valid, like one year. In the process, when a covered event comes (such as through illness, accident, or crop loss), the policyholder is allowed to claim.
4. Claim Filing
In case of an occurrence, which is covered by the policy, this is reported by the policyholder through a claim. This is done in an easy manner with a minimal amount of paperwork or online reporting through applications or text messages.
5. Receipts to a Payout
After acceptance of the claim, an insured individual is given a predetermined amount of money or a reimbursement. This can be used to cover the medical expenses, to reconstruct the property, or it can be used to sustain the family through the difficult moments.
Micro Insurance in the Real-Life: Examples
These cases demonstrate that microinsurance in Pakistan can really change the lives of people.
A small-scale farmer fails to harvest his crops when they are flooded. Due to his crop microinsurance, he gets payment and can purchase seeds to plant during the next planting season.
One of the domestic workers purchases a health micro insurance plan with a low premium. The insurance handles the majority of her hospital expenditures when she is hospitalized in case she falls ill.
There is a road accident resulting in the death of a rickshaw driver. His life micro insurance policy ensures that his family gets a certain amount of money that enables them to handle the funeral expenses and be able to survive.
Conclusion: Protect Your Future with IGI Insurance
Micro insurance has a significant contribution in enhancing financial strength for low-income populations. It enables individuals to cushion themselves and their loved ones against misfortunes that could befall them without necessarily having to part with huge amounts of cash.
When you want to find a trustworthy micro insurance in Pakistan, IGI Insurance provides convenient, cheap, but trustworthy insurance that is customized to meet your needs. IGI Insurance is available to you whether you are a farmer, a shopkeeper, a daily wage worker, or anybody who wants to continue living peacefully.
Plan your tomorrow and safeguard your future today with micro insurance plans of IGI Insurance.
