Why Are Rural Populations Still Under-Insured in India?

What the Numbers Say?

1. Only about half of the rural population in India has government health insurance.
2. Moreover, over 34% of rural residents lack government health insurance, leaving them vulnerable during health emergencies.
3. Over 61% of people living in rural India have no life insurance, which puts the dependents in the family at huge financial risk.
4. Over 21% of the rural population lacks access to a commutable chemist store, and only around 12% of people can access government medical stores like Pradhan Mantri Jan Aushadhi Kendra.

Lack of Insurance in Rural India: The Barriers

The rural population is said to be the backbone of the Indian economy. Still, a large number of people in rural areas do not have access to insurance policies. Some of the probable reasons are discussed below:

Lack of Awareness

The level of insurance awareness is low in rural areas. Compared to the daily and immediate needs, an insurance policy seems an abstract idea to many. Since insurance benefits are not immediate, they may become irrelevant to people. The lack of insurance campaigns in rural areas could be another reason contributing to the lack of awareness among people.

Lack of Access

Another major setback is the lack of accessibility to insurance providers. Despite rising internet penetration, many people still prefer offline methods for financial purposes. The concentration of insurance centres in urban areas could be one reason why rural areas still do not have easy and direct access to insurance.

Affordability Concerns

Not every family in rural parts of the country has a regular and stable income. So, those with irregular income often see insurance premiums as an added financial burden. For them, food, medicine, and farming needs are obvious priorities rather than saving for an insurance premium.

Trust Deficit

Lack of financial literacy often encourages fraudulent activities. Due to bitter experiences of the past, it is common for people to have trust issues. The same could be for villagers who may have faced fraud. Some may have difficulty trusting insurers regarding the promises they make. So, this could also contribute to the lack of insurance policies among the rural population.

Types of Insurance Policies

Insurance policies can be of different types. The idea is to cover the financial strain that may arise from the loss or damage to the insured. Common types of insurance policies are:

Health Insurance

Health insurance policies ensure the medical needs of an individual or a family. In case of a medical requirement, the insurance provider covers the medical expenses of the insured individual. You may purchase individual or family health insurance policies, as per your preferences!

Life Insurance

A life insurance policy covers the life of an individual. In case of the death of the assured individual, the insurer pays the agreed amount to the nominee/family. It can be of different types, like term insurance, whole life insurance, ULIPs (Unit-linked Insurance Plans), etc.

Motor Insurance

Motor insurance covers various motor vehicles, including two-wheelers, cars, and commercial vehicles. If the insured vehicle is damaged or is lost, the insurer covers the financial liabilities. There are broadly two types of motor insurance: third-party policy and comprehensive motor insurance.

Note: Third-party liability insurance is mandatory for all motor vehicles in India under the Motor Vehicle Act, 1988.

Importance of Insurance

Insurance is not a luxury; rather, it has become a basic requirement. An insurance policy safeguards your hard-earned money from rapid depletion, providing a strong financial backup. Here’s how:

Financial Fall-back

Typically, an insurance policy assures financial support in times of crisis. For instance, medical insurance pays for hospital bills, home insurance covers losses/damages to the home's structure, motor insurance pays for damages to property or person, etc.

This simply means you, as well as your loved ones, have a financial back-up if things go unplanned and the unfortunate happens.

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Uncompromised Healthcare

A health insurance policy enables access to quality healthcare facilities that would otherwise pose a significant financial burden, particularly for rural families. Here is an example:

Surendar Lal, a 48-year-old farmer from a small town in Rajasthan, had to undergo a gall bladder surgery. The government hospital nearby lacked the necessary equipment to perform the treatment. Surendar was concerned; hospitalisation in a big city would mean digging into his modest savings. Thankfully, his son, who lived in Jaipur, had purchased a health plan that covered his parents, too.

Surendar, without borrowing money or falling into debt, could easily afford the treatment, that too in a state-of-the-art hospital.

Peace of Mind

Insurance means someone is there to take care of losses and damages to the insured's life or property. So, it gives you the mental peace, and you no longer have to stress over such unpleasant expenses.

Agricultural Security

Since rural India is heavily dependent on agriculture and farming, insurance also affects it. Having an insurance policy means your finances are intact against unforeseen circumstances. It gives you the flexibility to continue agricultural work without any compromise or pause.

Over To You

Insurance policies are no longer out of reach. With the right solutions, rural households can gain the protection they need against health, agricultural, and life risks. Insurance policies can provide financial backup but also save rural families from slipping back into poverty.

Our platform lets you understand, compare, purchase, and renew insurance policies without any hassle. You are just one step away from understanding insurance policies at Jio Insurance Broking. Connect with us today!