Microinsurance
Categories: Insurance
When you think of insurance, you probably think of big ticket items: your home, your car, your life. The idea is that a worst-case scenario event involving one of these items would wipe you out. You couldn’t afford to pay for the losses, such as rebuilding your house or replacing your car. (In the case of life insurance, of course, it's your beneficiaries who couldn’t afford it. You'll be indifferent by the time that insurance kicks in.)
As such, you cover the big things. Small things, however, you don’t bother to insure. If you lose your $40 baseball cap, you'll just buy another. No need to file a claim.
But what might seem small to some people makes a big difference to others. Enter: microinsurance.
Microinsurance covers items that may seem to us like really small change. However, for people living in extreme poverty (like in developing countries), they become crucial.
Microinsurance usually comes into play for people living on less than $4. So...not the poverty of the guy who walks your dog and can't afford both Netflix and Hulu...but the poverty of someone scraping out an existence in Bangladesh or a slum in Lagos.