This paper examines the critical legal and regulatory challenges surrounding microinsurance as a mechanism for financial inclusion in the Global South. While microinsurance has emerged as a vital tool for risk mitigation among low-income populations, its dual identity as both a social welfare instrument and a commercial product creates significant juristic tensions. Traditional legal doctrines, such as uberrimae fidei (utmost good faith) and contra proferentem, are analysed through the lens of acute information asymmetry and consumer vulnerability, arguing for a functional shift toward proactive consumer protection. By conducting a comparative analysis of regulatory models in India, Kenya, and Latin America, the research illustrates a “trilemma” between achieving market scale, ensuring consumer safety, and maintaining regulatory simplicity. The study highlights how India’s prescriptive mandates drive scale but risk low product value, while Kenya’s technology-led approach through mobile money introduces novel digital risks. Ultimately, the paper advocates for a coherent legal framework built on the pillars of proportionality, expanded supervisory perimeters, and a human rights-based approach to social security. It concludes that the long-term sustainability of microinsurance markets depends on transitioning from court-centric litigation to accessible alternative dispute resolution mechanisms that protect the dignity of the most vulnerable consumers.