Insurance has long been seen as a costly endeavor for those struggling to make ends meat and is often one of the first things to be cut out of the budget when push comes to shove. Families would rather keep the lights on and keep food on the table in the present than insure against a future event that may or may not happen. This is an obvious choice in the moment, but down the road when the insurance is desperately needed, it could end up becoming a very costly mistake. That is why the rise of microinsurance and other micro industries are so fascinating, because they put those in less favorable financial positions in a path to still gain access to these institutions. This article will dive deeper into the topic by exploring the following three questions:
- What Is Microinsurance?
- Who Benefits The Most From Microinsurance?
- What Are Examples Of Micro Industries?
What Is Microinsurance?
Typical insurance involves the person being insured paying a fixed fee on regular intervals. This way, if some event should happen such as a car crash or a broken bone, the insurance company will help you cover this very expensive cost. Microinsurance on the other hand involves only paying for exactly what you need. This can include a single item, vacation or person as opposed to an entire family.
Who Benefits The Most From Microinsurance?
The biggest benefactors of microinsurance are those who could not afford more traditional forms of insuring. Insurance, no matter how small the amount, is always better than no insurance as you will be left to foot the entire bill without any insurance. Low income families are able to use microinsurance and similar products to cover only what is absolutely critical or what they expect to need insurance for the most.
What Are Examples Of Micro Industries?
Almost anything that can currently be insured in a more traditional way can also be insured on the micro scale. For example, instead of paying a monthly premium for your car insurance, some car owners insure on a pay as you go plan. This allows you to be insured for only the miles you drive. Typical insurance requires a fee whether or not your car moves. This same idea works for insuring one’s health and even for renter’s insurance. As more low income individuals have access to these markets, they will be better protected against losses.
While microfinance is typically my specialty, I’m ecstatic to see other micro centric sectors rapidly developing and I look forward to future developments.