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Last Updated : Oct 11, 2019 03:22 PM IST | Source:

Why bite-sized protection for lower-income groups makes sense

Insurers have invested in developing robust in-house systems to create an end-to-end digitalised sales experience

Moneycontrol Contributor @moneycontrolcom

Rushabh Gandhi

India as a nation has its own distinct multi-layered overtones. Today, there are varied groups of consumers with different levels of financial awareness. Financial literacy levels are specifically low for those with limited means and a greater need for financial support, credit and risk protection.

The relatively easier access to credit, that supports instant gratification without the necessary checks and balances of a default social security system, further economically exposing this group.


Fulfillment of goals is a certainty when insurance is part of everyone’s priorities. In line with this idea, below are some of my thoughts around making small, bite-sized insurance available.

Microinsurance-an indispensable investment need

The propensity to borrow from money lenders is known to be higher in the lower income groups in India. These families have physical savings in the form of farms, houses, gold among others. Increased borrowing exposes them and their families to falling in debt traps and therefore, loss of these physical assets.

It is the prudence of having bought insurance that insulates these groups against any form of unfortunate occurrences such as failure of crops, diseases, wage loss, or even untimely death. The Indian mass market who work with revolving credit, need a financial inclusion model that is fair, transparent, cost-effective, regulated, and one that leverages existing infrastructure.

Government and industry together in the mass-market protection 

The government, for its part, continues to encourage and promote micro-insurance uptake. Among the administration's various steps one that has received a positive response is waiver off GST, on micro-insurance premiums. Even the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) scheme, an opt-in group-term assurance cover with a fixed premium of as low as Rs 330 offering a cover of Rs 2 lakh, is one of the oft spoken products aimed at this segment.

In the micro-insurance space, the private players have devised inventive ways of delivering value for this hardworking segment, as well. The consumer challenges pertain to possibilities of irregular income, requiring them to have options of paying single premiums that cover a longer time span. There is also the question of reimbursed premium amount benefit if the life assured survive through the term.

 Digitalisation, a cost-efficient distribution enabler:

Seamless collaborations between insurers, government, regional rural banks, and online payment service providers is a disruptive way in which the insurance industry is working to reach customers.

Insurers have invested in developing robust in-house systems to create an end-to-end digitalised sales experience. To protect the genuine customers from elements with fraudulent intent in the customer pool, big data and analytics and AI are now the watchdogs in the system ensuring 100 percent genuine claim settlements - every insurer’s foremost objectivy.

Walking the talk on making insurance 'accessible'

Insurance, as the industry collectively maintains, is not the preserve of a handful few, but the right of every single citizen.

Pushing for an inclusive development in the absence of social security systems is the collective intent of the government as well as the industry. In this larger canvas, IndiaFirst Life is committed to delivering optimal customer value to the lower-income groups, to ensure as many individuals as possible come into the risk-protected fold.

The writer is deputy CEO of IndiaFirst Life Insurance

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First Published on Oct 11, 2019 03:22 pm
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