Introduction: The rural population are more vulnerable to risks such as illness, injury, accident and death because of their social and economic situation. There is need to provide financial protection to poor families for the same. Health insurance could be a way of removing the financial barriers and improving accessibility to quality medical care by the poor and also an effective social security mechanism. Objective: Objective of this study is to find the awareness regard-ing health insurance and its source of information and to know the reasons for opting health insurance as well as to assess determinant of awareness of health insurance. Material and Methods: Study was done in 4 villages and 100 houses from each village were covered by systemic random sampling from April 2012 to July 2012 making a total sample size of 400. A pretested questionnaire was used to collect the data through house to house survey. Data entry and analysis was done using epi info 7 statistical software. Results: Of the total 400 respondents, 57.25 percent (229) of the respondents were aware of health insurance. A statistically significant association were found between awareness and various determinants viz. Sex, education, occupation and socio economical class. Major reasons for opting for health insurance were; refund of cost of drug during illness (100%), followed by economical gain (40.65%). Conclusions: Awareness regarding health insurance is poor; therefore awareness creation is needed. Education, socio-economical status and occupation were favourable determinants for opting health insurance.