Life is uncertain, and we cannot predict what will happen in the next moment. When we think of such uncertainties while caring for our loved ones, we often feel worried. It is where life insurance comes to our rescue. Most life insurance policies ensure the financial well-being of our loved ones when we won’t be around.
While looking for online term plan benefits, it is crucial to look at various factors, such as adequate life cover, policy term, and premium. However, if there is one thing that is often left unchecked, it is an insurer’s claim settlement ratio.
The moment of truth related to the chosen life insurance plan comes at the time of claim settlement. The last you would want for your family is not getting benefits under the policy that you have continued to pay for all your life.
Hence, you must know what claim settlement ratio is and how to check it before purchasing any life insurance policy.
What Does Claim Settlement Ratio Refer to?
It is a quantifiable metric used to define the percentage of claims settled or paid by an insurance company. In other words, claim paid ratio is the percentage of claims paid out of total claims received.
It is a crucial thing to consider while selecting a life insurance company. If the company cannot settle the claims, the whole purpose of buying the policy is negated.
Consider this illustration to understand claim settlement ratio better.
An insurance company received 1000 claims in a year and settled 975 out of the total. The remaining 25 claims have been rejected on various grounds. This makes claim paid ratio of the company to be 97.5%.
The higher the claim settlement ratio, the higher the chances that your policy nominee will get the insurance benefits settled on time when needed the most. Alongside this ratio, the total number of claims that an insurance company receives also tells how big and reputable it is in India’s insurance market.
More About Consistency of Claim Settlement Ratio
Although checking the claim settlement ratio of insurer matters, you should also know about its consistency. It is because a lack of consistency in maintaining this ratio is also not a good thing. You can check for this consistency in the Annual Report published by IRDAI every year.
Check for the historical overview of an insurance company’s claim settlement ratio for the last five years. Many renowned insurance companies like Max Life Insurance have witnessed improvement in their claim paid ratio for the last few years. This will tell you about the consistent efforts invested in settling maximum claims filed by the policyholders.
In case you do not find any inconsistency in the claim paid ratios of an insurer for the last few years and the ratio is also high, above 90, you can trust the insurer and buy life insurance.
How to Avoid Claim Rejection?
Claim settlement ratio assures people of the ease of getting insurance benefits. However, in some cases, the cause of claim rejection lies at the policyholder’s end. It is thus, essential for you to know about possible reasons that can lead to claim rejection.
Truthful Declaration of Health Condition
The risk of losing life depends a lot on the lifestyle followed by an individual. This is what all insurers consider while assessing the eligibility of a policy buyer. It is your responsibility to make truthful disclosure of your health and lifestyle habits when buying life insurance.
In case the insurer finds out discrepancies in such details at the time of claim assessment, the claim may get rejected.
Proper Filling of Insurance Application Form
Incorrect details filled in the application form can also be the reason for claim rejection. This often happens when the policy buyer does not fill the form on his own but ask someone else, mostly an insurance agent, for the same.
The agent may miss out on the buyer’s personal details, which can become problematic in the future.
Make sure you fill the insurance form by yourself carefully. You can ask the insurer for help in case you have doubts while filling the form.
Sharing Claim Procedure with the Policy Nominee
Your duty to protect your family’s financial future does not end at buying a life insurance policy after checking the insurer’s claim settlement ratio. As soon as you buy the policy, inform the policy nominee about it, and discuss the claim filing procedure specific to your insurer.
This will clarify any doubt that the nominee might have about the policy’s claim filing process.