Vietnam: Microinsurance amount to protect the risks of life, health and property is only up to VND 120 million?
Is the microinsurance amount to protect life, health and property risks up to VND 120 million?
Pursuant to Article 3 of Decree No. 21/2023/ND-CP stipulating as follows:
Insurance amount and maximum premium amount of microinsurance products
1. The insurance amount of each insurance policy of a micro-insurance product that protects life and health risks does not exceed 05 times the annual per capita income of the near-poor household in the urban areas as prescribed by the Government at the time of product deployment.
2. The insurance amount of each insurance policy of a micro-insurance product protecting against property risks does not exceed the market value of the insured property at the time of insurance participation and does not exceed than 05 times the annual per capita income of the near-poor household in urban areas as prescribed by the Government at the time of product deployment.
3. The annual premium of each insurance policy of a micro-insurance product must not exceed 5% of the annual per capita income of the near-poor household in urban areas according to the regulations of the Government at the time of product deployment. The premium must correspond to the insurance benefit.
At the same time, according to the provisions of Clause 2, Article 3 of Decree No. 07/2021/ND-CP stipulating as follows:
Multidimensional poverty line for the period of 2022 - 2025
...
2. Standard of poor households, near-poor households, households with average living standards in the period of 2022 - 2025
a) The poverty line
- Rural area: A household with an average monthly income of VND 1,500,000 or less and lacking at least 3 indicators measuring the level of basic social service shortage.
- Urban area: A household with a monthly per capita income of VND 2,000,000 or less and lacking at least 3 indicators measuring the level of basic social service shortage.
b) Near-poor household standard
- Rural area: A household with a monthly per capita income of VND 1,500,000 or less and lacking under 03 indicators measuring the level of basic social service shortage.
- Urban area: A household with a monthly per capita income of VND 2,000,000 or less and lacking under 03 indicators measuring the level of basic social service shortage.
c) Standard households with average living standards
- Rural area: A household with an average monthly income of over VND 1,500,000 to VND 2,250,000.
- Urban area: Being a household with an average monthly income of over VND 2,000,000 to VND 3,000,000.
....
Thus, it can be seen that the per capita income/month of the near-poor household is from VND 2,000,000 => the average income per capita/year of the poor household is from VND 24,000,000
Therefore, the insurance amount of the microinsurance product is calculated as follows:
- The insurance amount of each insurance policy of a micro-insurance product protecting life and health risks does not exceed VND 120 million.
- The insured amount of each policy of micro-insurance product protecting property risks does not exceed the market value of the insured property at the time of participation and does not exceed VND 120 million.
Vietnam: Microinsurance amount to protect the risks of life, health and property is only up to VND 120 million?
How long is the term of microinsurance products in Vietnam?
Pursuant to Article 4 of Decree No. 21/2023/ND-CP and Article 5 of Decree No. 21/2023/ND-CP stipulating the term of microinsurance products as follows:
- For life insurers, micro-insurance products are provided to protect life and health risks with a term of no more than 5 years.
- For non-life insurance enterprises, branches of foreign non-life insurance enterprises are provided with:
+ Microinsurance products protect life and health risks with a term of 01 year or less
+ Microinsurance products protect property risks with a term of no more than 5 years.
- For businesses provided with health insurance:
+ Micro-insurance products that protect life risks with a term of 01 year or less;
+ Microinsurance products that protect health risks have a term of no more than 5 years.
- For mutual organizations providing micro-insurance, only micro-insurance products with term of 01 year or less may be deployed.
What are the characteristics of microinsurance products in Vietnam?
Pursuant to the provisions of Article 144 of the 2022 Law on Insurance Business in Vietnam stipulating as follows:
Characteristics of microinsurance products
A microinsurance product shall have the following basic characteristics:
1. It must be concise, easy to understand; needs to involve streamlined or simplified actuarial procedures; or requires no actuarial service.
2. It merely includes insurance benefits to meet basic demands for protection against life, health and property risks for participants in coverage plans that last no more than 05 years;
3. The sum insured per an insurance contract and annual costs of coverage for each insured person in a contract shall not exceed the maximum limit specified in the Government’s regulations.
Thus, microinsurance has three basic characteristics as above.
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