By definition, micro-insurance is simply …affordable insurance provided for low income people to protect themselves from financial shocks imposed on them through unpredictable events. While the risks faced by the poor are no different from those encountered by others, this group of people are more vulnerable to such risks due to their very limited resource base.
Therefore, they face a greater financial burden when hit by an unexpected event, such as the untimely death of a family member, deadly illness or injury, or loss of assets from natural disasters. The reality is that when low income households are faced with such difficulties, harsh choices are made to endure such ordeals and just to get by.