Daniel,
I substantially agree with your comment. Credit-life cover is more a lender-centric product than microinsurance. But where the credit-life cover is for both the husband and wife it provides something extra,life cover to a person who had not borrowed. Further when the entire loan amount is covered, under some types of policies, the claim amount is more than the outstanding loan. This excess is paid to the family of the deceased. These types of policies are widely in force in Indian microfinance.
Regards
Srinivasan
On 18-Jun-2015, at 9:47 PM, danrozas@yahoo.com [MicrofinancePractice] wrote:
Derek -- these are interesting observations for sure. But on the one point of loan cover insurance, I'm having a hard time seeing this as a client-oriented product. I get that clients are concerned about loans in the event they die or become incapacitated, but is that a reflection of client need or the result of MFI practices? Let me propose a simple concept -- in the event a client dies or becomes incapacitated, the loan should die too. After all, the loan is a contract between the MFI and the client, not her family. Likewise, a group might be expected to vouch for clients' credit-worthiness, but should they be expected to vouch for clients' longevity as well?
For MFIs that have trouble managing this risk, why can't they buy a group life cover for the loan pool? This should be much more cost effective than doing the same on a per-client basis.Loan-life insurance is one of the core microinsurance products out there, but honestly, I have trouble seeing it as a client-centric product.Daniel
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Posted by: Narasimhan srinivasan <shrin54@yahoo.co.in>
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