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You can buy life insurance for as low as Rs 200 premium/year

Monday, October 08, 2018
By Dhirendra Mahyavanshi

Dhirendra Mahyavanshi, Cofounder, Turtlemint

A life insurance policy is an important requirement for every individual’s financial security. The policy promises a lump sum benefit if the insured dies prematurely. Thus, a life insurance plan provides financial security to the individual’s family by promising a financial corpus even when the individual is not around to pay for his family.

Even though life insurance is necessary, many individuals, especially those living in the rural areas, find affording a life insurance policy difficult. The associated premiums are high and so the rural and low income population miss out on a life insurance policy. However, the Insurance Regulatory and Development Authority of India (IRDAI) saw the need of insurance for the rural sector and introduced the concept of micro insurance through the IRDA (Micro insurance) Regulations, 2005.

What is micro insurance?
Micro insurance is insurance meant for the rural and social sectors. Micro insurance policies come with very low premiums which are affordable for individuals with low incomes. Here are some of the aspects of micro insurance which have been defined by the IRDAI –

  • All insurance companies are mandated to sell micro insurance policies.
  • Micro insurance policies will have sum assured in the range of INR 5000 and INR 50, 000
  • All insurance companies have to source a minimum percentage of their annual business from the micro insurance sector
  • The minimum requirement of micro insurance sales would increase every year
  • Different types of life insurance plans can be sold in the micro insurance segment

Who can sell micro insurance policies?
Life insurance companies have a different dedicated segment of representatives who sell micro insurance policies. These policies are sold in specified areas and are differently designed. Companies might also engage the help of intermediaries to sell its micro insurance plans. Intermediaries like Non-Governmental Organisations, Self-help groups and micro finance institutions can sell micro insurance policies.

Objective of micro insurance
The main objective of micro insurance is to provide insurance solutions to the economically weaker sections of the society who need insurance protection the most. IRDAI has mandated micro insurance with a view to uplift the backward classes and give them the financial security which is available through insurance.

So, affording life insurance is no longer a big deal for the economically weaker sections of India. Through micro insurance plans they can buy an insurance policy and create financial security for their families.

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