VisionFund’s life insurance products come alongside our credit products, to ensure that our clients’ families are cared for in case of events such as a death, which can put huge pressure on a household’s financial resources.
Access to Life Insurance
In the contexts of rural poverty where VisionFund works, households are often at high risk of illness and death which can have serious consequences for family well-being. Insurance products in remote areas can be hard to come by; and, if they’re available at all, insurance premiums often require large up-front payments which are too expensive for a rural farmer to cover. If the farmer is injured or passes away, this can severely impact the ability of their children and families to recover from the loss of income, leading to increased vulnerability and poverty.
VisionFund has established three program models, some in partnership with insurance companies around the world, to allow our clients to access formal life insurance based on their needs and income. VisionFund partners with local insurance providers to create the right product needed for the country or region. When it comes time to make a loan, our microfinance institutions (MFIs) will pay the insurance premium on behalf of the client, with a small additional fee added to the loan lifecycle. In times of personal grief or struggle, we want to ensure all our clients’ families can focus on being present for their loved ones, and not worry about the security of their financial future.
Credit Life Insurance
Credit Life Insurance is a unique component of almost every credit product VisionFund supplies.
When VisionFund makes a loan in most of our countries, we automatically add a small fee of around one percent of the total loan value that serves as basic life insurance coverage. If our client – the loan holder – passes away, this ensures that the loan can be written off, with no further cost to the family. This approach means that families aren’t left struggling to make ends meet with loan repayments on top of a reduction in income, especially in times of mourning, and VisionFund’s risk is reduced.
Term Life Insurance
Term Life Insurance aims to give the most benefits to the client’s family.
VisionFund also offers Term Life Insurance, which is life insurance for a fixed term, usually for a year at a time. Term Life Insurance voids further loan repayments and offers payment for funeral expenses, as well as other expenses that may arise. Term life differs from credit life in that it is not related to a loan, and the benefits are fixed; the client pays an up-front fee in exchange for a lump-sum payout in the event of the client passing away.
Term Life Insurance aims to give the most benefits to the client’s family, who will be able to cover their expenses if their loved one dies. Costs are kept low, as VisionFund generally seeks to insure our whole portfolio at once.
Enhanced Credit Life Insurance
Enhanced Credit Life Insurance is taking our client care one step further.
By taking the core life insurance model for death events and improving it to cover all lifecycle events of our client and their families, we can help ensure their financial security in the long term. If a client or any member of their family is ill, injured or passes away, the Enhanced Credit Life fee covers all principal-only loan installments for the duration, allowing families to resume their income-generating activities when the time is right.
Enhanced Credit Life Insurance also supports our clients if they fall ill or need to stay in hospital. The product uniquely responds to clients’ needs by providing loan repayments during the period of medical attention, which provides a cushion against bad credit history. If a mother and her baby need to stay in hospital after giving birth, Enhanced Credit Life Insurance will take care of any loan repayments, until either the mother or father is ready to return to their business activities.
Looking to the Future
We're looking at innovative solutions to expand our insurance offers.
To make our life insurance products possible for the most vulnerable, VisionFund partners with insurance providers to contextualise the right products for the country or region. We seek to tailor-make risk profile methodologies that fit the local contexts, and can be adopted by the insurance provider with minimal risk. One such example is in remote villages in Africa, where VisionFund is recognising the marriage confirmation letter issued by village elders as acceptable identification for insurance, rather than needing a burdensome formal marriage certificate which can be hard to obtain in rural areas.
VisionFund is looking into ways of partnering with providers of digital technology, to deploy client onboarding mechanisms that are effective and timely. We believe digital and other training solutions can help explain life insurance products, so families can select the products that are right for them.