Claim Settlement Ratio of Best Term Insurance Companies

5 min read

Term Insurance Companies’ Claim Settlement Ratio

People often don’t utilize the benefits of term insurance plans as either they select the wrong plan or an unreliable insurance company. While purchasing a term plan, every buyer should pay attention to the claim settlement ratio. This simple term can make your purchase decision a hit or leave you devastated.

The claim settlement ratio is a common term in the field of the term insurance sector. The IRDA claim settlement ratio (CSR) indicates the number of claims an insurance provider used to settle in a year against the total number of claims that it received throughout the year. This term insurance claim settlement ratio exhibits a clear picture of the insurance company in front of the customers. Companies that acquire the best term plan claim settlement ratio are the most dependable and you can go ahead with them without any apprehension.

What is the Claim Settlement Ratio?

Let’s unearth it.

Claim settlement ratio = (Total claims calculated)/(Total reported claims outstanding claims at the starting of the years – outstanding claims at the end of the year)

The claim settlement ratio of term insurance companies indicates their veracity and honesty. A company that possesses a higher ratio is considered more reliable as compared to others. With this type of company, your chances of getting a claim settlement will also rise.

Best Term Insurance Companies in India and Their Claim Settlement Ratio for 2020-21

By going through the formal website of the Insurance Regulatory and Development Authority of India (IRDAI), you can easily get the claim settlement ratio of various insurance providers.

Insurance companies The claim settlement ratio for 2020-2021
Max Life Insurance 99.35%
Aegon Life Insurance 99.25%
Bharti Axa Life Insurance 99.05%
LIC 98.62%
DHFL Life Insurance 98.61%
Exide Life Insurance 98.54%
Kotak Life Insurance 98.50%
Reliance Life Insurance 98.49%
Bajaj Allianz Life Insurance 98.48%
PNB MetLife Insurance 98.17%
TATA AIA 98.02%
HDFC Life Insurance 98.01%
ICICI Prudential Life Insurance 97.90%
Aditya Birla Sun Life Insurance 98.04%
Canara HSBC Life Insurance 97.10%

What do you understand from a claim settlement ratio?

This strengthens the financial security and firmness of a customer. The prime purpose of a term insurance plan is to offer financial protection to the rest of the family members under any untoward circumstances. If your chosen insurance company settles your claims, then, your family members will receive a healthy sum assured through a hassle-free claim process. With a term plan claim ratio, you can be assured that your loved ones will never face any financial crisis in case of your untimely demise.

Portrays the company’s trustworthiness and credibility

If your selected insurer follows a decent CSR over a stipulated period, then it will settle your claim efficiently without any deferral.

How do you calculate a claim settlement ratio?

By using the below-mentioned formula, you can calculate the claim settlement ratio of an insurer.

Claim Settlement Ratio (CSR) = (Total number of claims settled in a year/ Total number of claims in a year) X 100

Suppose, an Indian insurer settled 9,700 claims out of the 10,000 claims for 2020-2021. Then, its CSR will be 97% (9,700/10,000*100)

Steps to check to claim your insurance

When an insured policyholder passed away due to some unfortunate incidents, family members of the late policyholders may face acrimonious experiences to get the claims against the term insurance policy plan. Here, we are mentioning 5 steps for a quick claim settlement process.

  •  Never forget to intimate the insurance provider regarding the death of the insured policyholder. You can either approach the insurance company directly or you can contact an insurance agent.
  •       You need to fill up the Claim Intimation Form (CIF). Properly mention all the required information about the policyholder as well as the beneficiaries of the pan.
  • Once you complete, you need to give all original documents along with their attested copies (as required by the insurer).
  • Keep a copy of all imperative documents with you.
  •  After receiving all the documents, the company will verify and approve your request.
  •  Once the investigation is completed, the insurer will settle your claims

Things you must ponder before selecting your term plan and insurance provider

To make your term insurance policy plan worthy, enquire about the insurance company, especially its claim settlement ratio. Don’t forget to consider the below-mentioned points while comparing term insurance plans of various insurers.

  • Claim settlement duration: Before making any commitment, always check how long an insurance company used to take time to settle a particular claim from an insured person. This will give you an idea about how quickly an insurer processes the claims apart from holding a high CSR.
  • Healthy record: Most insurance companies quickly settle small sum assured amounts as compared to a bigger sum assured. But, a reliable insurer settles all types of plans without any delay.
  • Other parameters: The above we mentioned the two prime parameters that a potential buyer should consider before choosing an insurance company, don’t underrate other parameters including the overall service quality of the insurer, the coverage plan, the plan benefits, additional rider options, market position, etc.

What are the common reasons for a claim rejection?

While purchasing a term plan, a buyer should understand an insurance provider will not reject claims without any lawful reasons. Some mistakes of the policyholders encourage insurance companies to reject claims. Let’s take a look at some of the reasons for claim rejection.

  • The policyholder may submit improper details and information
  • While buying a term policy, a policyholder needs to fill up all the details properly. Don’t rely on an insurance agent; rather every policyholder should fill up the details on their own.
  • Don’t hide any pre-existing health issues
  •  Always be transparent while mentioning the health history of you and your family members
  • While checking the policy documents, go through the claim process properly

Every Indian insurance company follows a set of guidelines while settling the claims of the customers and all policy buyers should respect this. To make your claim settlement process smooth and healthy, don’t forget to check the claim settlement ratio of your chosen insurer. If you are not satisfied, then look for another option.

 

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Gayatri Prabhu, Head-Digital Business at Mahindra Insurance Brokers Limited (MIBL) is one those few digital leaders who has the width and depth that is required to execute an ROI driven holistic digital strategy. She cuts through the noise, identifies the critical levers and leads her team to successful execution of the defined strategy. Her core mantra to win new and retain existing customers is: understand the consumer behavior and craft experiences around it.

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