There are numerous insurers in the market offering life insurance plans with varied features and benefits. It is imperative to check various aspects while selecting a life insurance provider. One of the most important points to keep in mind while buying a life insurance is the claim settlement history of the insurer.
Understanding claim settlement ratio
Claim settlement ratio is an indication of the total number of death claims approved by the insurer. The ratio is determined by dividing the total number of claims approved by the number of claims received by the insurance company. For instance, if the insurance provider received a total of 100 death claims and has settled 96 of them, then the claim settlement ratio is 96%.
Reasons to check insurers' claim settlement ratio
Many individuals check the policy features and benefits, financial strength, ratings of the company, and the level of customer friendliness extended by the insurer while narrowing down their options. However, many fail to check the claim settlement history of the insurance provider. Following are the two major reasons to do so.
1. It is a reliable metric
The claim settlement ratio is a yardstick to measure the insurer's reliability. It helps to identify whether or not the insurance provider pays the beneficiaries the death benefit amount. Failure to settle claims defeats the entire purpose of investing in a life insurance policy. Moreover, a higher claim settlement ratio indicates a greater likelihood of your future claim being settled by the insurer.
2. Helps identify if your loved ones will be financially secured
Life insurance policies are purchased based on the premium outgo and expected returns after the demise of the insured. The beneficiaries may use the insurance amount to meet their financial needs, such as repayment of an outstanding loan, meeting day-to-day expenses or education expenses, among others. Checking the claim settlement history of the insurance provider gives assurance about your dependent's financial future.
It is, therefore, necessary to check the claim settlement ratio before purchasing a life insurance plan from a particular provider. To do so, you may simply visit the website of Insurance Regulatory and Development Authority of India (IRDA), the agency regulating the insurance industry in India. You may browse through the industry data and identify whether or not your selected insurance provider has a high claim settlement ratio.
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