Purpose: Micro insurance is now recognized as the terrain where innovation in insurance can be and indeed is being experimented. The strongest drive to understand more about micro insurance comes from the realization that insurance is an essential tool in improving the protection of low income persons against the financial exposure due to life cycle events, economic activity, environmental issues and political issues. Insurance cannot resolve any of the major underlying issues; it can however provide the tools that delimit the financial exposure of single individuals when adverse, cost generating events occur. For Insurance companies providing Micro insurance to claim that their work is fostering rural growth, there must be proper development of products that respond to the need of the clients and in a way that is commercially viable. There is a need for market education which will help to demystify micro insurance so that when agents come, people are willing to engage with them. Many studies have attempted to study the phenomenon of health micro insurance, but none tried to study the rural Self help Groups (SHGs) Life micro insurance. This article illuminates the real challenges in taking up micro insurance among rural SHGs in Vellore District, Tamil Nadu, India. Design/Methodology/Approach: Data was collected from primary as well as secondary sources. Primary data was collected from respondents using questionnaire and interview method. Secondary data was collected from NABARD, LIC, NGOs, Journals and other published and unpublished records. Using graphical representations and Chi Square Analysis the paper aims to find out what are the real obstacles involved in micro insurance.
Findings: This study reveals that majority of the low income members in Vellore District are illiterate and as such there is lack of understanding among them regarding various products and benefits offered under the micro insurance by insurance companies. There is less contribution from Government side for providing services to the rural poor. There is less contribution from Government side for providing services to the rural poor. There is no proper mechanism or adequate infrastructure to systematically reach the informal group. The Insurance Companies do not want to cover much people in the low income sector as it involves a large number of risks. Originality/Value: The study relating to micro insurance illuminating the real challenges is the original work of the author.
