MILK Discussion Note #1: Doing the Math: Can Delayed Payment of Claims Erode the Value of Life Microinsurance?

One of the principal questions MILK seeks to answer is: Does microinsurance help protect people from large shocks (high cost events) in comparison to other alternatives? The problem in the Philippines shines a light on the subtleties at play in this question. If the cost of making a claim (in terms of getting documentation or “bridging” the financing need with other sources of funds) is too high, even potentially valuable products might offer low or no financial value to clients, who may have been better off turning to other financial sources or reducing expenditures significantly following the event.  MicroEnsure and MILK propose to "do the math" to determine the effects of slow claims payments.