Micro insurance service

It is an insurance arrangement designed to protect low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved. Insurance reduces vulnerability as households replace the uncertain prospect of peril with the certainty of making small regular premium payments and receiving a pay out if the peril occurs.

Types of insurance products that the institution is offering

  1.  Credit life insurance policy: – insurance that covers the outstanding principal and interest of a loan on the death of a borrower or plus additional benefits. In this insurance policy, the insurance term corresponds with the loan term.

In order to broaden customer preferences, OMFI is delivering this insurance type in three options.

  • Option one: – Loan only policy:-Insurance that covers the outstanding principal and interest of a loan on the death of a borrower.
  • Option two: – Loan and additional benefit policy
  • Insurance that covers the outstanding principal and interest of a loan on the death of a borrower plus additional benefit of funeral expense.
  • Option three: – Loan only policy for borrower & his spouse
  •  Insurance that covers the outstanding principal and interest of a loan on the death of a borrower plus his legal spouse with in stated loan period.

 Insurance premium of 1.5% – 2.5% is deducted upfront from the total loan amount to purchase the insurance policy.  The premium amount determined in the policy is based on the estimation of the frequency and severity of the event occurring and sizes of benefit packages in which the options comprises.

  • Livestock indemnity insurance: – is an insurance arrangement aiming at mitigating the financial losses suffered by the farmers due to the death of cattle as a result of various specified risks in the policy document. For a specified premium, party (insurer) promises to reimburse or indemnify the insured against loss or damage in the event of the covered livestock during period of insurance.

Now days in both products institutionally there are 21,732 insured clients and among this the institution provided coverage for 8 insurance claims.