Microinsurance schemes across the globe suffer from low enrollment rates. We model voluntary health insurance that is offered to microcredit group members at the individual level as a social dilemma, which can be overcome by offering insurance at the group level. We test this framework by means of a framed field experiment. Theoretically, in jointly liable credit groups, individuals with low risk aversion have an incentive to forgo individual insurance as they can rely on their peers’ contributions when falling ill. Risk-averse individuals on the other hand prefer to enroll in insurance as long as the majority of group members do. The binding nature of group insurance offers a way to commit risk-neutral individuals to the social optimum. Findings from microinsurance games played with 355 microcredit clients in Tanzania confirm these predictions. We conclude that group insurance may increase demand for insurance, which is relevant for the provision of health insurance in the context of microfinance institutes as well as other informal risk-sharing networks.