Introducing microinsurance for our microfinance clients
We have partnered with Guardian Life Insurance Limited to offer our first microinsurance product - credit shield insurance to our 5 million microfinance clients. The product is targeted towards the lower-income population of Bangladesh to protect them and their livelihoods in the event of death of a household member or the earner.
Our microfinance clients have been using credit and savings products to access opportunities, plan for the future, and cope with shocks. However, some events are hard to predict, and even harder to cope with.
Every year we experience more than 22,000 deaths of microfinance clients or earning members in their families.
For households that face this adversity, credit shield insurance fits in as an important safety net to provide an alternative to emergency strategies for protecting household finances and promote resilience.
When microinsurance was piloted a year ago, we learnt that insurance penetration is low due to negative preconceived perception towards it and lack of awareness. In Bangladesh, traditional insurance companies mainly focus on the upper and middle-income population leaving a large portion of the total population unserved. To fill that gap and best meet the needs of our clients and their families, credit shield insurance has been designed to be accessible, affordable, and easy to use.
Any of our microfinance clients can avail credit shield insurance when applying for their loan by making a minimal one-time premium payment set at 0.3 per cent of the loan amount for individual coverage or 0.7 per cent to cover dual members of a household. This insurance product comes with a cash benefit from BDT 10,000 (USD128) to BDT 20,000 (USD256) to cover the costs of funeral and other arrangements. Credit shield insurance also covers the remaining loan outstanding in full and allows savings to remain intact for the family to meet their emergencies.
To ensure hassle free, fast settlement of claims, only two documents of proof is required from the client end – the death certificate issued by doctor/local authority and a copy of National ID. Moreover, our dedicated team and customer service assistants are beside our clients to deal with queries and concerns every step of the way.
Commenting on the launch of credit shield insurance, Shameran Abed, director of BRAC’s microfinance and ultra poor programmes said, “Poor households are particularly vulnerable to sudden shocks, and nothing is more debilitating than losing an earning member of the family. With the launch of this product, we are taking one more step towards helping our borrowers become more resilient so that they can withstand such shocks.”
The service legal agreement (SLA) signing ceremony of BRAC and Guardian Life Insurance Limited was held at BRAC Centre on 12 January 2017. BRAC’s founder and chairperson, Sir Fazle Hasan Abed; executive director, Dr Mohammad Musa; senior director, Asif Saleh; director of microfinance and ultra poor programmes, Shameran Abed; chief executive officer of Guardian Life Insurance Limited, M M Monirul Alam, and managing director of Square Pharmaceuticals Limited were present at the ceremony.
About Guardian Life Insurance Limited
Guardian Life Insurance Limited (GLIL) started its business activities in 2014. It is the fastest growing life insurance company in Bangladesh. GLIL aims to provide the best insurance products and services to the people of Bangladesh. To know more about Guardian Life Insurance Limited, please visit http://www.guardianlife.com.bd/