Rural Insurance

Rural Insurance is a type of insurance that has been specifically designed for the rural public to insure their businesses such as farming, cattle, poultry, etc. This plan ensures that families who are living in rural regions have a secure and safe future so that they can live a comfortable and happy life. It helps them to cover risks associated with different aspects of their life. Rural insurance plans come with pocket-friendly premium rates and a quick claim process.

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In case of loss of crop or death of animals, individuals can claim benefits. A region with a low population density and in which at least 75 percent of the population of a male is included is agriculture comes under the rural section. Because of the financial instability of individuals living in rural regions and the death of cattle, crop failures, etc, the Indian Government launched different schemes for the profit of the rural section. These schemes are united with the Rural Development Program and financially backed up by the State and Central Governments. 

As per Section 32B and 32C of the Insurance Act (1938), the insurers expect to offer a fixed percentage of businesses to individuals living in social, unorganized, informal, the rural sector, backward, and economically susceptible sections, as stated by the regulatory authority (IRDAI). A regulation was issued to further implement sections 32B and 32C that made it compulsory for the insurers to underwrite business equivalent to 2 percent of the full gross premium for the 1st financial year, 3 percent of the full gross premium for the 2nd financial year, and 5 percent for the full gross premium from the 3rd financial year onwards in the rural area. 

Types of Rural Insurance Policies 

Rural insurance plans have been crafted with the objective to provide financial protection to the rural population. Here are some of the important rural insurance plans available in the industry. Insurance companies might offer these plans individually or in combination with each other. 

  1. Motor Insurance

    Automobiles used in rural regions such as private vehicles, commercial vehicles (passenger-carrying or goods-carrying vehicles), tractors are covered under motor insurance plans. At the time of damage or loss to these automobiles by parameters stated in the plan, the money as promised at the starting of the plan is provided to the life assured. It provides comprehensive/wide coverage for agricultural tools such as scooters, cars, tractors, motorcycles, and trailers. 

  2. Property Insurance

    Property insurance cover damages caused to shops, home, schools, retail outlets, and agricultural vehicles. A financial benefit is offered to the life assured in case of damage or loss caused to such property because of certain factors such as explosions, fire, acts of God, riots, and so on as stated in the policy. 

  3. Accident Insurance

    Personal accident insurance plan offers a specific payout to the life assured or his/her loved ones in case of partial or total disability, death of the policyholder because of an accident. The amount paid to the nominee/life assured’s family on the death of the policyholder is the sum assured amount chosen. The amount claimed in such situations depends on the level and condition of disability. The plan covers partial disability, dismemberment, repatriation of mortal remains, and permanent disability. 

  4. Livestock Insurance

    Livestock in rural regions offers income to the owners and loss of these livestock results in income loss. Thus, these insurance plans were formed to provide financial protection against the disability or death of livestock like bulls, cattle, sheep, goats, etc. The main cause of this could be a disease, accident, a riot, a natural disaster. In case of disability or death of the livestock, a pre-specified amount is offered to the life assured. 

  5. Poultry Insurance

    It covers parent stock and broilers of chicken 

  6. Critical illness insurance

    This insurance provides financial assistance in times of financial burden caused by the diagnosis of a critical ailment as stated in the policy documents. A critical illness treatment requires a large amount of money. It sometimes leads to an income loss because an individual might not be in a condition to work. The critical illnesses covered under such plans are cardiac conditions, cancer, kidney failure Alzheimer’s disease, paralysis, etc. An individual diagnosed with a critical illness is provided a certain amount for treatment and other related expenses. 

Eligibility Criteria 

As per the Insurance Regulatory and Development Authority of India (IRDAI), rural area that is eligible for the rural insurance has to fulfill the below conditions: 

  • Population density should not be more than 400 per Sq. km. 

  • Population less than 5000 individuals 

  • Minimum 75 percent of the male population much be involved in farming activities 

Benefits of Buying Rural Insurance 

  • Easy to understand 

  • Low and pocket-friendly premium rates 

  • This can help in compensating monetary losses covered under this policy 

  • The plans help people in rural sectors to become independent

What is Covered by Rural Insurance? 

Rural insurance is related to the lifestyle risks of individuals living in rural areas/villages. This insurance plan involves: 

  • Poultry Insurance 

  • Hut Insurance 

  • Cycle rickshaw policy 

  • Honey bee insurance

  • Sericulture insurance 

  • Lift irrigation insurance 

  • Sheep and goat insurance 

  • Failed-well insurance 

  • Aqua-culture insurance 

  • Agriculture pump set policy 

  • Farmer’s package insurance 

  • Animals involved in rural insurance such as rabbits, elephants, pigs, elephants, and circus animals

How Rural Insurance Works? 

  • Assess your requirements and the loss related to your assets so that you know which kind of insurance you should opt for 

  • The assessment helps in deciding the amount of premium 

  • Check and compare different insurers and plans to choose the right one for you 

  • The insurance company checks whether the policyholder lives in the rural area 

  • The premium amount should be decided mutually between the life assured and the insurance company after going through the livestock/property information. 

  • In case of risk, the company instantly informs the insurer/bank about the unfortunate event 

  • Event evidence, duly filled claim application form, and the FIR report are submitted by the life assured 

  • After this, the claim is verified by the bank officials.

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