Purchasing a term insurance policy is undoubtedly one of the most significant financial decisions in your life. Not only is it about you, but it is also about your family, your parents, your partner, and your kids. The term “insurance” is taken out for your beloved ones to be protected even in your absence.
Nevertheless, when you look for the policy on the internet, you come across several choices. Every insurer claims to provide the customer’s preferred plan. The costs seem minor, while the perks are great. This scenario can be perplexing, particularly if you are a beginner in buying insurance. However, one aspect can expedite and secure your decision. This aspect is the claim settlement ratio.
Let’s comprehend why this basic figure holds so much significance when it comes to selecting the best term insurance coverage in India.
What is Term Insurance in Simple Words?
Uncomplicated term insurance is a solely protective plan. You give a certain sum every year. The sum is known as a premium. In case of your death during the policy period, the insurer pays a housing amount to your relatives. The amount is known as the sum assured.
If you live through the whole policy period, no amount is refunded. The core of protection, not saving or investing, is what the term “insurance” is about. Hence, term insurance is affordable and a must-have for every working person.
Why Choosing the Right Term Insurance Matters
A large number of people think that buying any term policy would be enough. The truth is, this is not completely correct. The real benefit of a term plan is only seen when a claim is raised. At that time, your family should receive the money conveniently and punctually. There should not be any delay or denials. The settlement ratio of claims is what becomes so critical in this context.
What Is Claim Settlement Ratio?
The claim settlement ratio is a metric that gives the percentage of the total number of claims that an insurance company has paid during the whole year out of the total number of claims it received during the same period. It is expressed in the form of a percentage. For instance, the insurer’s claim settlement ratio would be 98% in case it received 100 claims and paid 98 of those claims. The higher the number, the better the claim payment history of that company.
The ratio is made available every year by IRDAI, which is the Indian insurance regulatory body.
Why Claim Settlement Ratio Is So Important
- When your family gets the insurance money, they are already under emotional stress. They should not be subjected to further inconvenience during such a trying time.
A high claim settlement ratio conveys three straightforward facts:
- To start with, the company is really committed to making payments for the claims.
- Secondly, it has neat and equitable processes.
- Lastly, there would be less chance of the company turning down the claims that are valid.
Thus, the specialists are bringing it out once again that it is not only about low premium when it comes to the best term insurance plan in India but also about a solid claim settlement ratio.
How Claim Settlement Ratio Impacts Your Decision
Let us see this through a simple example. Think of two insurers:
- Insurer A decides to charge a very low premium. But its claim settlement ratio is only 85%.
- Insurer B, on the other hand, has a little bit higher premium. But its claim settlement ratio is 98%.
Which one do you think will be less risky for your family?
The majority of people would go for Company B. Though the premium is a little higher, the peace of mind is much greater. An excellent claim settlement ratio provides a guarantee that your family will receive the funds without any hassle, thus raising the chances of the claim being paid out.
Is Higher Always Better?
Yes, undoubtedly a higher claim settlement ratio is definitely good; however, it should not be the only consideration. Some small companies might have a high ratio just because they process fewer claims. On the other hand, some large companies may have a slightly lower ratio due to handling a large number of claims.
Therefore, consider the ratio in combination with the other factors, such as the company’s reputation, period of existence, and customers’ feedback. However, as a general rule, preference should be given to the insurers that have had high claim settlement ratios for many years.
What Is a Good Claim Settlement Ratio in India?
Simply put:
- A ratio above 95% is very good.
- A ratio between 90% and 95% is acceptable.
- Below 90% is a case of careful thinking.
When you are examining the best term insurance plan in India, always verify the latest ratio released by IRDAI.
Common Reasons Why Claims Get Rejected
Claim rejection is a nightmare that many people dread. Most of the time, however, rejection is caused by careless mistakes that could have been avoided.
Some of the most common reasons for rejection are:
- Not providing accurate health information
- Guilty of not declaring smoking or drinking habits
- Incorrect details of the nominee
- Policy lapse due to non-payment of premiums
Even the top company may reject a claim if there is a mistake in the details. Thus, being honest and providing accurate information are of utmost importance.
How to Improve Claim Success for Your Family
You might feel you are taking simple steps to help your family later on.
- Always provide true health information.
- Disclose all ongoing diseases.
- Timely payment of premiums.
- Change nominee details when there are changes in life.
- Store policy documents in a secure place.
Each of these small steps might end up being quite a big difference when it comes to claim settlement.
Claim Settlement Ratio vs Claim Amount Paid
The ratio could be confused by some individuals with the whole sum of money paid out. The ratio merely indicates the number of claims that have been settled, not the total cash paid. A company with a high ratio might have a low total payout if it sells small policies. On the other hand, another company might have a low ratio but pay big sums.
thus, if possible, examine both figures. Nevertheless, for the majority of purchasers, the claim settlement ratio is a reliable first step.
Online Term Plans and Claim Settlement
Nowadays, purchasing term plans online is a practice among many. The premiums of online plans are usually lower. The claim process is also uncomplicated. Online submission of documents is a possibility. The support team is there to assist the family at every stage.
The majority of first-rate insurers providing online plans also boast of excellent claim settlement ratios. Thus, making online term plans a favorable option for a lot of individuals.
Does Claim Settlement Ratio Change Every Year?
Indeed, it is subject to change every year. This is the reason you should always look at the most recent data when buying. Don’t get deceived by the previous statistics used in commercials or blogs that have been old for a long time. The Insurance Regulatory and Development Authority of India (IRDAI) releases yearly updates, and these statistics are made available to the customers, enabling them to decide wisely.
Conclusion: Make a Smart and Safe Choice
Selecting a term insurance policy is never about getting the cheapest one it’s about getting the one that is the safest for your family. The strongest term insurance policy in India is the one that provides excellent coverage, unambiguous terms, and a high claim settlement ratio. When you pay attention to this ratio, you are considering the future. You are thinking about the comfort and security of your family.
Do not rush. Plan. Compare policies. Examine the policy details. Analyze the claim data. Don’t hesitate to inquire if necessary. A well-chosen term insurance plan may not affect your life today. However, it can someday protect everything you cherish.
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