Presently India is a country of opportunities, being second largest populated country in the world and continuously growing. A number of start-ups are raising due to initiatives of government and technological development. India have largest skilled workforce in the World and whole World has recognised India calibre and strength.
The insurance now a days become essential need for healthy living. Insurance provides us risk cover against unforeseen future. It provides us financial support in distress. But todays only 3.50% Indians are insured. The main cause of low insurance coverage in illiteracy and ignorance.
There are many insurance companies in the Indian Market and a lot of products have been introduced by them. Every product carries various terms, conditions and disclaimers, which confuse customers.
While in India ‘Micro Insurance’ refers to providing insurance to low income families, a broader, globally accepted definition is where insurance products provide a specific coverage for a specific need at a lower cost to customers. Unlike generic products, ‘micro insurance’ brings down the cost for consumers by putting in innovative constraints on ‘coverage’, ‘time’ or usage.
Micro Insurance product is designed to meet the needs of persons, especially residing in rural areas, whose primary requirement is basic insurance coverages in life, such as payment of insurance benefits upon death of bread winner, to the family or health insurance etc. The intention is to provide low cost and affordable insurance to those persons, who are living in rural Indian and have no source of income other than farming and labour.
Micro Insurance Products generally based on
(i) Time based constraints; (ii) Event based constraints and (iii) Need based constrains.
In other products insurer generally assume that the customer is exposed to equal level of risk over the entire year. Micro Insurance products are generally on the basis of use, such as a customer thinks to take insurance for a short term while he is going to abroad, etc.
Micro- insurance plans are based on extremely low premium rates. Because of its affordability and specificity, majority of Indians can get the advantages of insurance.
A Micro Life Insurance Product is therefore a pure term insurance product, or endowment assurance product or health insurance product with or without accident benefit.
A General Micro Insurance Product includes health insurance, insurance coverage on huts, livestock’s, tools or instruments or any personal insurance contract.
IRDAI (Micro Insurance) Regulation, 2005 provides maximum and minimum sum assured limit for Micro Insurance Products in Schedule I and II of the regulation. For any product the sum assured cannot be less than Rs. 5000/- and more than Rs. 50000/-.
Micro Insurance Products of insurance companies are sold through Non-Governmental Organisation or a Self-Help Group or Micro Finance Institutions or a Non-Profit Organisations as their agents.
A General Insurance Company and a Life Insurance Company may tie up to sold Micro Insurance Products to customers.
A Micro Insurance Product may be distributed by a licensed agent or insurance broker, but Micro Insurance agent is prohibited from distributing any insurance product other than Micro Insurance Product.
A Micro Insurance Agent is allowed at act as agent for one Life Insurance Company and one General Insurance Company at a time by entering into an agreement with them. The agents will be duly registered with IRDAI and go through necessary training before selling any Micro Insurance Products.
With the notification of the IRDA (Micro-insurance) Regulations 2005, by the Authority, there has been a steady growth in the design of products catering to the needs of the poor.
The flexibilities provided in the Regulations allow the insurers to offer composite covers or package products.
Insurance companies are now offering already approved general insurance products as micro-insurance products with the approval of the Authority, if the sum assured for the product is within the range prescribed for micro-insurance.
Category of Products: Endowment/ Savings/ Pension
Under this category, there is life protection, both on survival and death. Pension can also be built into the product. Some Insurers offer accident benefit and permanent disability benefit during the premium paying term only, or for the full term. The sum is capped between Rs 30,000 and Rs 50,000. A majority of the insurers offer policies under the non-medical scheme and automatic acceptance if size of the group is more than 200 members.
It is possible to offer an automatic cover facility after two years of premium payment. A policy bond is given and administration is done through a micro-insurance agent.
Some Insurers may exclude the risk coverage for the first 45 days. Suicide during the first year is covered to protect the third-party interest/ refund of premiums, excepting in the case of some insurers.
While it is popularly sold as an individual policy, Group Endowment is currently being issued by some Insurers for economically weaker sections.
Insurers are allowing a maturity age of up to 60 years, capping premium payment up to 45/ 50/ 55 years under different modes of premium payment, including monthly payment with the maximum term being 10/ 15 years.
Insurers are offering a free look cancellation during the 30/ 15 days period, after receiving the policy bond. Most of them are giving a 30-day grace period. All are giving liberal surrender values after 1/ 2/ 3 years.
Category of Products: Protection (Term insurance)
Life risk with accident benefit, is generally being offered under term products. A majority offer accident benefit and some offer permanent disability benefit too under term products. Capping:
No one is paying any Bonus in addition to the sum assured. The sum assured is capped between Rs 5,000 and Rs 50,000 or is defined as 100 times the annual premium. Some are giving refund or more than 110% of premium at maturity under term products. Others are not giving any maturity value. Majority are offering under non-medical scheme. Automatic acceptance if size of the group is more than 200 members.
Refund of Premium:
Most insurers are giving a refund of premium in case of suicide during the first year. Some entertain a refund for Single premium cases only.
Terms of Product:
While majority offer one-year term, some are offering 5/ 10-year terms under Group product.
Term of Policy:
Insurers offering Individual Term are offering 3/5/10/15 (premium paying term restricted to 10 years) year policies. Majority are allowing different modes of premium payment, including Monthly and Yearly premium.
Insurers are offering a Free look cancellation during the 30/15 days period after receiving the policy bond. Majority are giving a 30-day Grace period. Revival eligibility varies between 6 months to 2 years.
Category of Products: Health
Disability, hospitalization, loss, etc. Popular format of Health insurance cover is a fixed sum in case of the hospitalization (Pre, during and Post). Generally, benefits are 150 Rs/day hospitalization expenses, consultant fee up to Rs 4500/hospitalization, diagnostic expenses up to Rs 4500/hospitalization, transportation expenses Rs 350 per hospitalization. One overall limit for hospitalization may be defined as Rs 15,000 and overall sum Insured for one year defined as Rs 30,000. Group products with discounts offered to the members/clients of MFIs and NGOs and to specific sections of the population (such as all the BPL families in a state).
Entire family needs to be covered under one Sum Assured, any number of times.
Category of Products: Property
Mainly for Rural and Urban poor. Making good damage cover/loss/ input costs/ recurring costs due to natural causes/theft/accidents/burglaries/cover against diminished agricultural input/loss due to electrical/mechanical breakdown.
Key risks faced by low-income households like package cover and crop insurance product. Loss to livestock due to death, disease and accident dwellings – Fire policy for dwellings and contents Breakdown of agricultural implements cover for poppy/crops against inadequate/variation in fall/variations in different weather parameters. Limit based risk cover or on case by case basis.
Actual loss/market value whichever is less is reimbursed in case of Live Stock all indigenous, cross bread animal/birds defined Submersible/non-submersible Pump set up to 25/30 HP defined Building (Structure) / contents (belongings)/both defined.
Loss of life due to accident/diseases even in case of epidemics.
Category of Products: Personal Accident
Low income groups/Kissan Credit card holders/girl child parents/married ladies.
Death/Permanent Total Disablement/Total and irrecoverable loss of limb/eye sight Medical expenses during/pre/post hospitalization Percentage of Sum Assured on case by case basis entire family is covered under one Sum Assured any number of times All fees for surgeons/anesthetists/consultants/associated expenses of hospitalization under one Sum insured Parent of girl child /women covered with beneficiary as the girl child/insured women for death/PTD/ Total and irrecoverable loss for a limit.
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