BRAC has 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.
BRAC 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 BRAC 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.
Any of BRAC 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, BRAC team and customer service assistants are beside 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 programs 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.”
