UNDERSTANDING HOW MICROINSURANCE WORKS
Unbelievably many insurance products are not designed with the low-income earners in mind. You will notice that many insurance products in the market target corporates and the middle class. But the reality in Kenya and many other societies is that there are many people in –between jobs, running small businesses or even working as casuals. And these too matter and need to be treated with dignity, and hence the idea of coming up with insurance products that cater to their needs
Microinsurance is an affordable insurance designed to enable people especially low-income earners take up an insurance cover. The greatest benefit of microinsurance is its affordability. This provides a sense of security for many low income families who previously could not afford insurance because of the complexity of understanding it, difficulty of accessing it and the high premiums, yet these people face adverse risks.
Benefits of Microinsurance compared to conventional Insurance
With microinsurance you are provided with more flexible choices of paying premiums for a risk whose likelihood of occurrence is high. Premiums could be payable either weekly, monthly or annually. This flexibility allows you to adapt to whichever choice of premium payment that works best for you.
It is also designed to be simple in terms of understanding it as well as the process of buying and making claims. A great example is how for many microinsurance products you dial a short mobile code to buy a policy and make a premium payment and when a risk occurs you dial the same short code to make a claim.
Unlike conventional insurance where you have to buy different policies for the risks you want to get covered against, with microinsurance they usually bundle up several benefits so that with one policy you get covered for more than one risk. For instance an Imarisha Jamii microinsurance cover goes for premiums of KSH 150 a month and this offers one hospital cash when hospitalized, disability benefit in case of an accident, and funeral benefit when death occurs.
Because microinsurance understands that many low income households can’t afford to wait up for months to get their claims when a risk occurs, they have made it easy and quicker to get claims often through mobile money. For example a farmer whose crops are wiped out by a disease or poor weather can take a long time to recover and easily plunge into poverty. But with a microinsurance cover he can make a claim when the risk occurs and this with a compensation get back on his feet quickly despite his losses.
Unlike conventional insurance, microinsurance has embraced technology as a key component of its process. Therefore you do not need to sign in any papers when taking up a cover or making a claim. In addition it eliminates the hustle of having to go physically to the insurance company. By embracing especially mobile technology, microinsurance covers are able to reach to people even in rural areas. With microinsurance designing products with you in mind, you now have no excuse for not taking an insurance cover!
Have an Insured Week!