When you have few resources, insurance seems like a luxury product. Nevertheless, good insurance is an absolute added value for poor people. Things like a disappointing harvest, illness, excessive rain or a family death can be a minor disaster. This can force people into a spiral of poverty.
The threshold for insurance is high for the poorer population in the South, because the few resources that come in are needed to survive. The products offered by large insurers do not usually meet the needs of entrepreneurs or farmers with few resources. Finally, cultural factors can also constitute an obstacle.
Microinsurance can cover many risks, depending on the needs of the insured person. Two very common types of microinsurance are:
