INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)  
ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue XIV November 2025| Special Issue on Management  
Perception and Awareness of Microinsurance among Low-Income  
Earners in Nigeria  
Olawale Kazeem Ajiboye*  
Department of Actuarial Science and Insurance, University of Lagos, Nigeria.  
Corresponding Author*  
DOI: https://dx.doi.org/10.47772/IJRISS.2025.914MG00241  
Received: 01 December 2025; Accepted: 08 December 2025; Published: 19 December 2025  
ABSTRACT  
Microinsurance was introduced in Nigeria mainly to help people who do not earn much and cannot handle large  
financial shocks on their own, yet the idea has not really taken off as expected. From my observations during  
this study, many low-income earners still do not have a clear understanding of what microinsurance is meant to  
do for them. Some have simply never heard of it, while others only have a vague idea that it is “some type of  
insurance.” Because of this, I decided to look more closely at how low-income earners actually perceive  
microinsurance and whether they consider it useful. The study used a questionnaire, and 150 people responded:  
120 low-income earners and 30 insurance workers with direct experience offering these products. The findings  
paint a mixed picture. More than half of low-income earners were unaware of microinsurance before the survey,  
but many showed interest after a basic explanation. Many respondents mentioned protection against unexpected  
expenses, some level of financial stability, and peace of mind as reasons they would consider microinsurance.  
But the other side of the story is that many people do not trust insurance companies, and this came up repeatedly.  
Some said their hesitation comes from hearing about unpaid claims or complicated processes. So even when  
people like the concept, they are not always confident enough to commit to it. The statistical analysis also showed  
that income level influences how people assess insurance affordability. Those with very low or unstable incomes  
do not see insurance as something they can regularly afford. Overall, the study suggests that microinsurance can  
be valuable, but awareness, trust, and communication gaps need to be addressed before low-income earners fully  
embrace it.  
Keyword: Microinsurance, perception, low-income earners, insurance awareness  
INTRODUCTION  
The insurance sector remains a vital component of any country's economy and a key part of the financial services  
industry, due to its significant benefits (Apergis & Poufinas, 2020; Adebayo, 2019; Prabhakar et al., 2018).  
Insurance provides policyholders with protection against loss, mitigating risk, and enhancing peace of mind.  
However, in Nigeria, there is a significant challenge in ensuring adequate insurance coverage for Nigerians  
(Inyang & Okonkwo, 2022; Ime & Ikechukwu, 2017). Microinsurance aims to provide coverage for uninsured  
and low-income individuals. Consequently, it is a financial strategy aimed at helping low-income households  
manage and mitigate their vulnerability to risks, allowing them to protect their livelihoods and, at the same time,  
creating new market opportunities for financial providers (Inyang & Okonkwo, 2022). At the policy level, it is  
a crucial component of the financial inclusion framework linked to credit and savings, serving as a model for  
sustainable development while stimulating economic growth and social protection (Akaayar, 2025). Yet,  
challenges such as reaching potential customers, effectively communicating insurance concepts and products,  
and establishing infrastructure for processing claims hinder growth in this sector (Inyang & Okonkwo, 2022;  
Banjo & Oloyede, 2021; Ime & Ikechukwu, 2017).  
A central argument for the slow growth of the microinsurance industry in Nigeria is its relative newness (Ime &  
Ikechukwu, 2017). The microinsurance operations were officially recognized on 1st January 2014, in accordance  
with the National Insurance Commission (NAICOM) guidelines (NAICOM, 2015). In 2014, low-income earners  
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INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)  
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in Nigeria were defined as employees and self-employed individuals with an annual income of N250,000 or less  
(Kama & Adigun, 2014). However, at present, the majority of individuals in Nigeria earning 750,000 naira or  
less are classified as low-income earners, with common occupations including petty trading, farming, teaching,  
and artisan work (National Bureau of Statistics, 2022). A survey from the National Bureau of Statistics (2022)  
shows that about 63% of the Nigerian population are low-income earners. This indicates that a significant portion  
of Nigeria's population is low-income.  
Notwithstanding, the microinsurance sector in Nigeria is expected to grow at a compound annual growth rate  
(CAGR) of 2.2% from 2021 to 2031 (Inyang & Okonkwo, 2022). This signifies a steady but slow pace. A large  
proportion of low-income individuals lack health insurance, with fewer than 5% having employer-sponsored  
coverage (Ime & Ikechukwu, 2017). Also, only 7% of farmers had crop insurance (Ime & Ikechukwu, 2017).  
Hence, Nigeria's microinsurance coverage and penetration remain behind those of peer nations, despite its  
significant market potential. Uduakobong et al. (2022) assert that the microinsurance sector, when properly  
structured and managed, has the potential to significantly reduce the economic vulnerability of low-income  
households while also serving as a lucrative market for commercial insurance providers (Akaayar, 2025).  
Microinsurance provides a variety of coverage options, including property, health, life, and livestock insurance.  
It is designed to offer risk management and financial protection for individuals who are often vulnerable to  
unexpected events (Adebayo, 2019). However, limited financial literacy and distrust among low-income groups  
hinder the widespread adoption of microinsurance products (Inyang & Okonkwo, 2022; Ime & Ikechukwu,  
2017). Perception shapes willingness to purchase, while awareness influences understanding of benefits and trust  
in service providers. As a consequence, this investigation examines the key factors influencing low-income  
groups' perceptions and needs regarding microinsurance.  
LITERATURE REVIEW  
Conceptual Review and Analysis  
Micro insurance refers to affordable insurance solutions designed for low-income individuals, focusing on risk  
pooling to provide compensation to both individuals and groups (Inyang & Okonkwo, 2022). For  
Ajemunigbohun et al. (2015), micro-insurance is a financial arrangement designed to protect poor individuals  
from specific risks, requiring regular premium payments that reflect the risk's likelihood and cost. They further  
clarify that the size of the risk carrier does not define micro-insurance, the scope of the risk faced by households,  
or the delivery channels used, which may include various organizations such as community-based schemes and  
credit unions (Ajemunigbohun et al., 2015). On a similar note, Platteau et al. (2017) equated micro-insurance as  
community-based financing arrangements, such as community health funds and mutual health organizations.  
These schemes have emerged in environments characterized by economic challenges, political instability, and  
poor governance. The most emphasized feature is the community's active role in revenue collection, resource  
allocation, and service provision. Still, Uduakobong et al. (2022) described micro-insurance as an economic tool  
operating at the micro level, enabling local decision-making rather than reliance on distant governments or  
organizations.  
Microinsurance originated from two decades of microfinance research, yet many people remain unaware of its  
difference from other types of insurance. This poor understanding of the difference between micro-insurance  
and other insurance types has contributed to the target audience's limited engagement with micro-insurance  
products in Nigeria (Uduakobong & Ikeotuonye, 2022; Banjo & Oloyede, 2021). Microinsurance, as analyzed  
by Akaayar (2025), refers to insurance products designed for low-income individuals, distinguishing itself from  
general insurance through its low value, reduced premiums, and limited benefits. Similarly, Lawuyi (2025)  
highlighted that microinsurance products are characterized by their simplicity (available in vernacular or native  
languages), pricing range (from N15,000 to N1.5 million annually), policy term (maximum of 15 years), and  
limited benefits (not exceeding N25 million).  
Theoretical Frameworks and Hypotheses Development  
The theoretical framework for this study is based on consumer perception theory. The theory emphasizes the  
significant impact of consumer perceptions on their behavior within the market. It highlights the processes  
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INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)  
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individuals or groups engage in when purchasing, using, or disposing of products, ideas, or services to meet their  
needs and desires (Paz & Vargas, 2023). This theory suggests that how consumers interpret and understand  
various market elements can significantly affect their interactions, decisions, and overall engagement with the  
marketplace. Such perceptions can shape preferences, influence purchasing decisions, and ultimately drive  
market dynamics (Chang et al., 2024). This theory is significant as it explores how low-income earners behave  
in relation to micro-insurance, providing insights that can help organizations in the micro-insurance sector  
develop effective marketing strategies. In Nigeria, low-income earners who harbor negative perceptions or lack  
knowledge of micro-insurance are likely to distance themselves from these products. Conversely, if their  
perceptions are favorable, there is a strong likelihood that they will be more receptive to adopting micro-  
insurance offerings in the future. This understanding is crucial for tailoring the industry’s approach to effectively  
reach and engage this demographic.  
The decision-making process surrounding micro-insurance among low-income individuals in Nigeria begins  
with recognizing the specific needs that such products can address. Once the need is identified, individuals  
evaluate various micro-insurance alternatives that may also meet their needs. This evaluation is heavily  
influenced by the consumers' past experiences and the experiences of others with different micro-insurance  
offerings. Additionally, the development of consumer attitudes towards micro-insurance is shaped by several  
factors, including cultural background, exposure to similar financial products, and the methodologies insurance  
companies use in their marketing and service delivery. This intricate interplay of needs recognition, alternative  
evaluation, and attitude formation is critical to understanding the adoption of micro-insurance among this  
demographic. When low-income earners develop negative attitudes toward micro-insurance products, reversing  
this trend is difficult. To address this issue, active campaigns are essential to reshape consumer perceptions of  
these products (Adebayo, 2019). The theory of consumer perception underscores the need for marketers to  
educate consumers, helping them overcome their apprehensions and anxieties about using such products. A  
strategic approach involves fostering a positive attitude toward micro-insurance offerings and actively working  
to transform prevailing negative perceptions into more favorable views of these market options.  
Hypotheses Development  
Hypothesis 1  
●
●
H0: Insurance protection is not necessary for low-income earners in Nigeria.  
H1: Insurance protection is necessary for low-income earners in Nigeria.  
Hypothesis 2  
●
●
H0: Micro-insurance will not make insurance inexpensive for low-income earners.  
H1: Micro-insurance will make insurance inexpensive for low-income earners.  
Empirical Reviews  
Empirical evidence indicates that a lack of awareness of the terms and benefits of microinsurance policies  
significantly constrains low-income households' understanding. This limited perception hinders their willingness  
to embrace microinsurance products, even though these products are tailored to their specific needs and  
requirements.  
The study reveals a significant awareness gap regarding micro-insurance products among Nigerians. The  
research employed a planned survey to assess variations in micro-insurance awareness across different  
demographics of policyholders, including gender, age, education level, occupational status, and income.  
Findings indicate that neither education nor income significantly influences the knowledge of micro-insurance.  
This suggests that basic educational attainment and financial status alone do not adequately predict an  
individual's comprehension of micro-insurance products. Consequently, the study emphasizes the need for  
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targeted public education initiatives to improve understanding of micro-insurance, focusing on specific segments  
of the population that may benefit most.  
According to Ajemunigbohun and Ayobami (2018), subscription rates for insurance are highly influenced by  
awareness programs. Conversely, Dror et al. (2006) indicate that the costs associated with insurance do not  
significantly affect low-income families who choose to opt out. Still, they do so primarily because of their lack  
of understanding of insurance terminology. The research by Banjo and Anyamaobi (2022), using an exploratory  
research approach, investigates psychological and social barriers to the adoption of insurance products, with a  
total of 97 participants. The study found that most prominent among the difficulties in selling genuine insurance  
in Nigeria are insurance companies' tardy payment of legitimate claims, the sheer number of clauses in insurance  
policies, absurd rate cuttings, limited access to insurance companies by rural residents, and poor understanding  
of the significance of buying legitimate insurance among potential insureds. However, Banjo and Anyamaobi  
(2022) were limited by the fact that the samples were small and focused in Lagos state, and as such could not be  
generalized.  
Ajemunigbohun and Ipigansi (2022) explain that Nigerian policyholders lack knowledge of their product details  
due to communication breakdowns between insurers and intermediaries. They suggest that promoting insurance  
understanding requires culturally sensitive campaigns specifically for rural Nigerian audiences. Various studies  
have investigated how gender influences relevant awareness levels. Multiple studies show that gender creates  
substantial differences in financial literacy and microinsurance participation. Also, men demonstrate superior  
financial knowledge because they are responsible for household finances and participate in self-help groups  
(Ikpong et al., 2025; Akokuwebe & Idemudia, 2022). Gender-specific research data demonstrates the need for  
universal outreach programs that ensure equal access for men and women.  
Older individuals significantly influence the understanding of micro-insurance across various age demographics.  
Those below 25 years, while socially exposed to financial tools, tend to avoid micro-insurance, feeling no  
obligation to secure it (Adekunle & Vincent, 2025). In contrast, the 26 to 45 years age group typically opts for  
micro-insurance as a means to protect their growing families (Adekunle & Vincent, 2025). Meanwhile,  
individuals aged 46 and over frequently pursue micro-insurance for greater financial security, primarily due to  
limited awareness of modern financial products, despite having reached retirement age (Williams et al., 2023).  
Implementing targeted awareness strategies tailored to these distinct age segments can significantly enhance the  
effectiveness of micro-insurance programs.  
Research evidence about how education is linked to insurance acceptance displays conflicting results.  
A study by Adekunle and Vincent (2025) indicates that enhanced product understanding through education  
positively impacts insurance enrolment rates. However, Ioncică et al. (2012) present contrasting evidence,  
finding that individuals with higher levels of education often shun insurance. This phenomenon is attributed to  
an increase in perceived financial security, which diminishes the perceived necessity for external risk  
management tools. Additional studies suggest that education does not significantly influence the patterns of  
microinsurance acceptance (Putri et al., 2023; Dewar, 2018). Together, these studies paint a complex picture of  
the interplay between education and insurance uptake, highlighting that while education can facilitate  
comprehension and potentially promote enrolment, it may also foster a false sense of security that discourages  
individuals from seeking necessary insurance coverage.  
Research indicates that income is a significant factor in consumers' insurance purchasing decisions. This  
correlation highlights how financial status affects individuals' willingness and ability to invest in insurance  
products, suggesting that higher income levels may lead to greater insurance purchasing (Olasehinde, 2021).  
Conversely, lower income may limit access to insurance options, thus influencing the overall dynamics of the  
insurance market (Olasehinde, 2021). Hence, wealth directly impacts affordability and the assessment of  
insurance necessity. Magbagbeola and Omozejele (2021) highlight that irregular financial flows within low-  
income households hinder their ability to remain members of microinsurance schemes. While insurance adoption  
is closely tied to income levels, additional factors such as financial literacy, trust in the insurance system, and  
perceived benefits also play significant roles in shaping how income influences insurance purchase decisions.  
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RESEARCH METHODOLOGY  
Research Design  
This study employs a descriptive analysis design to gather quantitative data on the perceptions of low-income  
earners in Nigeria regarding micro-insurance. The descriptive design is chosen because it allows for a systematic  
collection of information from a sample population to describe the state of affairs as they exist.  
Population of the Study  
The population for this paper comprises low-income earners in Nigeria, particularly those engaged in the  
informal sector, such as artisans, traders, and laborers. Additionally, insurance company staff who provide  
micro-insurance services are included in the sample to provide insights from the provider perspective.  
Sample Size and Sampling Technique  
A basic random sampling method was used to pick a sample of 150 respondents. This sample comprised 30  
employees of insurance companies and 120 low-income people. The sample size was chosen based on the  
availability of respondents and the need to ensure a wide range of viewpoints was represented.  
Data Collection Instrument  
A structured questionnaire was used to collect primary data from respondents, including demographic  
information, awareness of micro-insurance, opinions on its advantages, and barriers to adopting it. The  
questionnaire included both closed- and open-ended questions.  
To ensure reliability, the questionnaire was reviewed by two experts in insurance studies to confirm that the  
questions were clear and appropriate for the target audience. A small pilot test was conducted with 10  
respondents, and their feedback helped clarify unclear items. These steps helped to improve both the clarity and  
consistency of the instrument.  
Data Analysis Techniques  
The acquired data were summarized using descriptive statistics, including frequencies, percentages, and charts.  
To examine the association between factors, such as knowledge and interest in micro-insurance, chi-square (χ²)  
analysis was employed.  
Respondents were informed that participation was voluntary and that their answers would be used only for  
academic purposes. No personal identities were recorded, and respondents were free to withdraw at any point.  
These measures ensured confidentiality and protected the rights of all participants.  
Data Presentation and Analysis  
Introduction  
This chapter presents the field data, along with an analysis to assess how low-income Nigerian earners view  
micro-insurance. The results are based on responses from questionnaires administered to 150 low-income  
earners and insurance company staff across various locations. To describe the results, the data is evaluated using  
descriptive statistics, such as frequencies, percentages, and charts.  
Demographic Characteristics of Respondents  
Gender Distribution  
The table below illustrates the gender distribution of respondents.  
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Gender Frequency Percentage  
Male  
92  
61.33%  
38.67%  
100%  
Female  
Total  
58  
150  
The majority of the respondents (61.33%) were male, while 38.67% were female. This indicates that more males  
participated in the survey.  
Age Distribution  
The table below depicts the age distribution of respondents.  
Age Group  
18 - 25 years  
26 - 35 years  
36 - 45 years  
Frequency Percentage  
35  
58  
40  
23.33%  
38.67%  
26.67%  
11.33%  
100%  
46 years and above 17  
150  
Total  
The age distribution shows that the majority of respondents (38.67%) are between 26 and 35, with 23.33%  
between 18 and 25. The percentage of respondents aged 45 or older is just 11.33% in the sample.  
Awareness and Perception of Micro-Insurance Among Low-Income Earners  
Awareness of Micro-Insurance  
The table below illustrates the respondents' awareness of micro-insurance products.  
Awareness Frequency Percentage  
Aware  
68  
45.33%  
54.67%  
100%  
Not Aware  
Total  
82  
150  
According to the table, 54.67% of respondents were unaware of micro-insurance products, while 45.33% were.  
This demonstrates how little low-income earners know about micro-insurance.  
Interest in Micro-Insurance  
The table below presents respondents' interest in purchasing micro-insurance products.  
Interest  
Frequency Percentage  
89 59.33%  
Interested  
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Not Interested 61  
150  
40.67%  
Total  
100%  
Although awareness of micro-insurance is low, the data shows that 59.33% of respondents expressed interest in  
purchasing micro-insurance products if they were available and affordable.  
Perceived Benefits and Challenges of Micro-Insurance  
Perceived Benefits of Micro-Insurance  
The respondents were asked to identify the possible benefits of micro-insurance. The table below summarizes  
the findings.  
Benefits  
Frequency Percentage  
Protection against risks  
Financial security  
Peace of mind  
105  
95  
70%  
63.33%  
56%  
84  
Affordable premiums  
77  
51.33%  
45.33%  
Savings for future emergencies 68  
The most commonly cited benefit of micro-insurance is protection against risks (70%), followed by financial  
security (63.33%) and peace of mind (56%). Affordability is also recognized as a key benefit by over half of the  
respondents (51.33%).  
Challenges Faced by Micro-Insurance Providers  
Respondents were also asked to state the challenges that may hinder the success of micro-insurance. The results  
are presented in the table below.  
Challenges  
Frequency Percentage  
Lack of trust in insurance firms 97  
64.67%  
54.67%  
45.33%  
36.67%  
Low awareness  
82  
68  
55  
High administration costs  
Poor claims process  
Lack of trust in insurance firms (64.67%) was the most significant challenge identified by respondents, followed  
by low awareness of micro-insurance (54.67%).  
Hypotheses Testing  
The hypotheses formulated in the introductory section were tested using the Chi-square (χ²) test to determine  
whether there is a significant relationship between the variables.  
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Hypothesis 1  
●
●
H0: Insurance protection is not necessary for low-income earners in Nigeria.  
H1: Insurance protection is necessary for low-income earners in Nigeria.  
The Chi-square test revealed a strong correlation (χ² = 12.45, p < 0.05) between respondents' insurance needs  
and their income levels. As a result, we reject the null hypothesis and accept the alternative, indicating that  
insurance coverage is required for low-income earners in Nigeria.  
Hypothesis 2  
●
●
H0: Micro-insurance will not make insurance inexpensive for low-income earners.  
H1: Micro-insurance will make insurance inexpensive for low-income earners.  
The results of the Chi-square analysis showed a significant correlation (χ² = 10.23, p < 0.05) between  
respondents' income and the affordability of micro-insurance. We conclude that micro-insurance can help low-  
income Nigerians afford insurance, rejecting the null hypothesis and accepting the alternative.  
The results of the study show that awareness of microinsurance among low-income earners remains relatively  
low, consistent with several earlier studies that reported the same issue. Even though many respondents were  
hearing about microinsurance for the first time, a good number showed interest once the idea was explained.  
This suggests that the challenge may not be outright rejection but simply a lack of exposure.  
The study also found that people generally associate microinsurance with safety and financial protection. This  
is similar to what other researchers have observed about how people respond when they understand what  
insurance can do for them. Trust, however, remains a significant issue. Many respondents said they were not  
sure insurance companies would honor claims, and this concern came up repeatedly. This is consistent with  
previous findings that pointed to distrust and poor communication as major obstacles in the Nigerian insurance  
market.  
The relationship between income level and the need or affordability of insurance was also noticeable. People  
with very low and unstable incomes tend to worry about whether they can keep up with payments. This supports  
existing studies, which show that irregular income often affects insurance uptake. Overall, the study’s findings  
highlight the need for insurance providers to communicate more openly and make their products easier to  
understand.  
SUMMARY, FINDINGS, RECOMMENDATIONS, AND CONCLUSION  
Summary  
The study explored the perception of low-income earners towards micro-insurance in Nigeria. It found that while  
awareness of micro-insurance is low, there is significant interest in such products. The perceived benefits include  
risk protection and financial security, but challenges such as a lack of trust and awareness hinder adoption.  
Findings  
1. Low Awareness: The research revealed that more than 50% of participants were not aware of micro-  
insurance offerings.  
2. Interest: Despite low awareness, 59.33% of respondents expressed interest in purchasing micro-insurance  
if it were made available and affordable.  
3. Challenges: Trust in insurance providers and awareness levels were identified as the most significant barriers  
to adoption.  
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Recommendations  
1. Public Awareness Campaigns: Insurance firms and regulators should conduct extensive awareness efforts  
to educate the public about the benefits and availability of microinsurance.  
2. Building Trust: Measures should be taken to improve trust in insurance providers, including simplifying  
the claims process and ensuring transparency.  
3. Policy Framework: The government should establish policies that encourage insurance providers to offer  
more affordable, accessible micro-insurance products.  
4. Collaboration with Microfinance Institutions: To reach more low-income earners, insurance providers  
should collaborate with microfinance institutions and other grassroots organizations.  
Conclusion  
Micro-insurance offers a promising solution for protecting low-income earners in Nigeria against unforeseen  
risks. However, its success depends on increasing awareness, improving trust in providers, and ensuring products  
are affordable and accessible. By addressing these challenges, micro-insurance can become a vital tool for  
poverty alleviation and financial inclusion.  
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