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Rural Insurance: A Revolutionary Facility for Rural India

By Juhi Walia
23 August 2022, 3:16 PM

Noting that 70% of India's population lives in rural areas and makes major contributions to the country's development, it is important that they benefit from welfare programmes. Rural insurance is a form of insurance specially designed and developed for the rural public to safeguard their businesses like farming, cattle, poultry, and so on. This plan ensures that families in rural areas have a secured future, allowing them to live a fulfilled and safe life. It enables them to cover the risks involved in various aspects of their lives. Rural insurance plans have low premium rates and a quick claim process.

According to the regulatory body IRDAI, insurers are anticipated to provide a certain percentage of business to people living in the social, unorganised, informal, rural sector, backward, and economically susceptible sections in accordance with Sections 32B and 32C of the Insurance Act (1938). 

Individuals may file claims for compensation in cases of crop loss or animal death. The term "rural" refers to an area with a low population density and where at least 75% of the male population works in agriculture. The Indian Government launched many programmes for the benefit of the rural part as a result of the people who live in rural areas' unstable financial situations as well as the deaths of cattle and crop failures, among other factors. The State and Central Governments have provided financial support for these programmes, which are incorporated into the Rural Development Program.

Rural Insurance Policy Types

Plans for rural insurance have been developed with the intention of giving the rural populace financial security. Here are a few of the most significant rural insurance options on the market. These plans may be provided separately or in combination by insurance firms.

Vehicle Insurance

Motor insurance policies cover automobiles used in rural areas, such as personal vehicles, business vehicles (passenger or goods-carrying vehicles), and tractors. The money guaranteed at the beginning of the plan is given to the policyholder at the time of damage or loss to these autos due to the criteria indicated in the plan. It offers thorough/wide coverage for agricultural vehicles such as tractors, cars, motorcycles, trailers, and scooters.

Assets Insurance

Damages to homes, businesses, schools, store outlets, and agricultural vehicles are covered by property insurance. In the event that such property is damaged or lost due to events, such as explosions, fire, acts of God, riots, and so forth as specified in the policy, the policyholder is provided with a financial benefit.

Accident Protection

In the event of partial or total incapacity or death of the policyholder due to an accident, personal accident insurance plans provide a particular compensation to the policyholder or his/her family members. The sum assured amount selected will be the sum paid to the nominee's/life assured's family upon the policyholder's passing. The amount sought in these cases is determined by the severity and state of the disability. Partial disability, dismemberment, repatriation of mortal remains, and permanent disability are all covered under the plan.

Read more - Benefits of Personal Accident Insurance

Animal Insurance

In rural areas, livestock owners provide a source of income; therefore, the loss of their herd leads to a reduction in income. These insurance programmes were created to offer financial security in the event that animals such as bulls, cattle, sheep, or goats become disabled or pass away. An illness, an accident, a riot, or a natural disaster could be the primary causes of this. A predetermined sum is offered to the policyholder in the event of infirmity or death of the cattle.

Poultry Insurance

Subject to certain exceptions, the poultry insurance will indemnify the owner in the event that a bird dies due to an accident (including fire, lightning strike, flood, cyclone, storm, earthquake, strike, riot, or terrorist act) or disease contracted during the insurance period.

Critical Disease Protection

According to the policy provisions, this insurance offers financial support in cases of financial hardship brought on by the diagnosis of a serious illness. A significant sum of money is needed for the treatment of a serious illness.

Because a person might not be able to work, it can potentially result in income loss. Heart disease, cancer, kidney failure, paralysis, Alzheimer's illness, etc. are among the important illnesses that these insurance plans cover. A person diagnosed with a critical disease is given a sum of money to help with treatment and other related costs.

Eligibility Requirements

According to the Insurance Regulatory and Development Authority of India (IRDAI), rural areas must meet the requirements listed below in order to qualify for rural insurance:

  • There shouldn't be more than 400 people per square km of population.
  • The population of lesser than 5000 people
  • A minimum of 75% of the male population must work in agriculture.

Advantages of Purchasing Rural Insurance

  • Simple to comprehend
  • Low and affordable premium rates
  • This may assist in making up for the financial losses covered by this policy
  • The programmes aid in the independence of rural residents

What Does Rural Insurance Cover?

The lifestyle hazards that people who live in rural areas or small towns face are covered by rural insurance. This insurance programme entails:

  • Poultry insurance
  • The hut insurance
  • Policy for cycle rickshaws
  • Insurance for honeybees
  • Insurance for sericulture
  • Lift insurance for irrigation
  • Insurance for goats and sheep
  • Failed-well protection
  • Assurance for aquaculture
  • Policy for agriculture pump set
  • Farmer's package
  • Animals involved in rural insurance programmes, including pigs, elephants, bunnies, and circus animals.

Time of Claim Settlement

Rural insurance claims are processed and paid out within 30 days of the accompanying documentation being received. If further research is required, the insurance firm has a three-month maximum time limit.


Rural insurance, though yet to be a well known facility, is a very important factor for rural citizens. The benefits of these insurance policies help the rural population to a greater extent and secure their financial and health status.

Read more-


1. Does rural insurance save tax?

Yes. The sum paid as a premium for rural insurance is, in fact, tax-exempt under Section 80C of the Income Tax Act.

2. Does the rural insurance plan offer a maturity benefit?

Customers are not provided with this benefit under the rural insurance plan.

3. What is the cost of a rural insurance policy?

Various premiums apply to different plans. It is obtainable for a discounted price.

4. Are loans offered under rural insurance plans?

No, such a service is not provided to customers of rural insurance.

5. What methods of payment are available for the premium amount?

Customers have several alternatives for paying the fee: Debit card, credit card, net banking, electronic check (ECS), etc. and Offline Mode: cash payment or visiting the nearest insurance branch office.

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