Assessing the Effectiveness of Micro insurance in Mitigating Risks Faced by Low-Income Families in Pakistan

Abstract

Many low-income households exist in Pakistan, making them susceptible to a variety of dangers like illness, agricultural failures, and natural catastrophes. The stability of their finances and general well-being may be significantly impacted by these dangers. A sort of insurance known as micro insurance is created specially to protect low-income families. This research will advance knowledge of the function of micro insurance in Pakistan's low-income families' financial safety and help guide micro insurance policy decisions. This research will use a quantitative cross-sectional research approach. With the use of this methodology, we will be able to gather data at a particular moment in time and examine how low-income households in Pakistan employ micro insurance to reduce risk. A regression analysis of the formula "Y = α + β1X1 + β2X2 + β3X3 + β4X4 + β5X5 + β6X6 + ε" would entail estimating the coefficients, testing their significance, and assessing the model's overall fit. According to the study's findings, micro insurance can significantly lower the financial risks that low-income households in Pakistan experience. Depending on the nature of risk, micro insurance’s ability to reduce it varies. The study discovered a substantial inverse association between low-income families' financial risks and micro insurance. The research findings may point to a statistically meaningful association between micro insurance coverage and risk reduction. the research's conclusion will offer insights on the efficiency of micro insurance in reducing risks faced by low-income families in Pakistan.