Micro-insurance is basically a financial arrangement that aims to protect low-income people against specific perils in exchange for regular payments directly proportionate to the likelihood of cost and risks involved.

The target population of micro-insurance involves people that are ignored by mainstream commercial and social insurance schemes, also people who previously did not have access to any insurance products.

So, technically micro-insurance covers market segments that are underprivileged, have low income and were not having appropriate insurance facilities in the past.
Micro-insurance covers risks such as:
Life Micro-insurance
Disability micro-insurance 
Health micro-insurance
Property micro-insurance
Crop micro-insurance

Micro-insurance covers the risk of those who have low income and cannot maintain life-cycle easily. So to help them cover various risks Micro-insurance scheme has been developed.