Rural Insurance

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Rural insurance is basically insurance that has been created for the rural public to insure their businesses such as poultry, cattle, farming, etc. Individuals can claim benefits in case of death of animals or loss of crop. An area with a low population density and in which at least 75% of the male population is involved in agriculture comes under the rural sector. Owing to the financial instability of people residing in rural areas and the possibility of failure of crops, death of cattle, etc. the government launched many schemes for the benefit of the rural sector. Such schemes are integrated with the Rural Development Programme and are funded by the State and Central governments.

According to section 32B and section 32C of the Insurance Act, 1938, insurance companies are expected to provide certain percentages of businesses to people of the rural sector, social sector, unorganised sector, informal sector, economically vulnerable class, backward class, etc. as mentioned by the IRDAI (Insurance Regulatory and Development Authority of India). In order to further implement sections 32B and 32C, a regulation was issued that made it mandatory for insurance companies to underwrite business equal to at least 2% of the total gross premium for the first fiscal year, at least 3% of the total gross premium for the second fiscal year, and at least 5% of the total gross premium from the third fiscal year onwards in the rural sector.

Types of rural policies

Rural policies have been designed with the intention to provide financial security to the rural masses that consist of a majority of the population and who toil day and night to enrich the country. Here are few of the major rural plan types available in the market. Insurers may offer these policies separately or in combination with each other.

• Personal Accident insurance – To financially protect the insured’s family in case the earning member faces death or disability due to death.
• Critical Illness insurance – To provide financial aid in times of financial distress caused by the diagnosis of a critical illness.
• Motor insurance – To offer coverage for agriculture-related vehicles such as tractors or equipment such as pump sets.
• Property insurance – To cover damages caused to shops, outlets, schools, etc. located in rural areas.
• Livestock insurance – To provide financial security to the owners of cows, buffaloes, bulls, sheep, goat, etc.

Personal Accident insurance

This insurance plan type provides a specific payout to the policyholder or his/her family if a certain accident caused death or disability of the individual. The amount payable to the nominee/policyholder’s family on the death of the insured individual, in most cases, is the sum assured chosen. The amount that can be claimed for disability depends on the condition and the level of disability. Dismemberment, partial disability, permanent disability, repatriation of mortal remains, are some of the conditions that are covered under such policies. The coverage, however, depends on the insurance company and the terms of the policy.

Critical Illness insurance

A critical illness insurance offers a payout to individuals who suffer from a critical illness as mentioned in the policy purchased. A critical illness creates a need for money due to the expensive treatments that may be required. It also leads to a loss of income because the person may not be in a condition to work. Cancer, cardiac conditions, kidney failure, paralysis, Alzheimer’s disease, etc. are few of the critical illnesses covered under such policies. A person who is diagnosed with such a critical illness is provided with a certain sum of money to manage treatment and other expenses.

Motor insurance

Automobiles used in rural areas such as tractors, private vehicles, commercial vehicles such as passenger-carrying or goods-carrying vehicles are covered under motor insurance policies. In case of loss or damage to such automobiles by factors mentioned in the policy, the amount as promised at the inception of the policy is provided to the policyholder.

Property insurance

Property insurance policies offer coverage for homes, schools, shops and outlets, and machinery in the rural regions of the country. A monetary benefit is provided to the policyholder in case of loss or damage caused to such property due to factors such as fire, explosions, riots, accidents, Acts of God, and so on as mentioned in the policy.

Livestock insurance

Livestock in rural areas provide income to the owners, and loss of such livestock leads to loss of income. Hence, livestock insurance policies were created to provide financial security against death or disability of livestock such as cattle, bulls, goats, sheep, etc. The cause could be an accident, a disease, a natural calamity, a riot or other such factors. In case of death or disability of the livestock, a predetermined amount is provided to the policyholder.

Insurance companies that offer rural policies:

Below is a non-exhaustive list of Indian insurance companies that offer rural policies:

• Central Bank of India
• Cholamandalam Investment & Finance Company Limited
• Dharmapuri District Central Co-operative Bank
• ICICI Lombard
• IndusInd Bank Limited
• HDFC Life