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Improving credit life microinsurance

Author

Listed:
  • Wipf, John.
  • Kelly, Eamon.
  • McCord, Michael J.

Abstract

Credit life cover - insurance that covers the outstanding principal and interest of a loan on the death of a borrower - is the logical starting point for organizations new to microinsurance. It is easy to introduce, simple for borrowers to understand, and seen by financial intermediaries as a support to their core business. Credit life can help create an understanding of microinsurance and expand demand by building an insurance culture. Unfortunately, credit life insurance is often designed poorly, providing little value to clients, and reinforcing a common negative attitude toward insurance. Thus, improving the value of credit life products may improve clients’ attitudes towards insurance, and in turn enhance demand. This paper reviews the structure of credit life products and benefits for borrowers, lenders and insurers. It measures the client value provided by a set of surveyed products, and proposes ways to expand products to provide greater value. The paper also investigates the operational issues that should be considered when providing expanded benefits.

Suggested Citation

  • Wipf, John. & Kelly, Eamon. & McCord, Michael J., 2011. "Improving credit life microinsurance," ILO Working Papers 994787923402676, International Labour Organization.
    • Handle: RePEc:ilo:ilowps:994787923402676
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