The point of purchasing a life insurance policy is to ensure that your loved ones get financial support in your absence. However, imagine paying for a plan all your life that gets denied to your family when the time comes! While it is customary for the insurance provider to check the cause of death minutely, it is only a routine procedure. In the presence of accurate information, the death benefit is released as promised. However, how do you know that the insurer will hold their end of the bargain and not deny your dependents the sum assured? This is where the claim settlement ratio comes into play.
Term insurance is not just one of the tax saving investments; it is an essential financial instrument that gives your family a sense of financial security in case something happens to you. But before you invest in a life insurance policy, it is essential to verify the insurer’s claim settlement ratio.
The claim settlement ratio is an indicator in percentage that shows the number of claims paid by the insurer in a given financial year with regards to the number of claims raised. For instance, if an insurer received 100 claims that year and they paid 95 of them, then the claim settlement ratio will be 95%. A number above the 90s is a good indicator, and the small number of claims rejected can be attributed to fraud, inaccurate information, and incomplete documentation. It is important to note that you should always purchase your insurance policy from an insurer that has a high claim settlement ratio.
According to the Insurance Regulatory and Development Authority of India (IRDAI), an annual report issues term insurance claim settlement ratio data concerning each insurance provider. You need to check this information at the source to make an informed decision when buying a policy.
Here are some of the commonly asked questions concerning the Claim Settlement Ratio when buying life insurance.
- 1 Why is it Important to check the Claim Settlement Ratio when Buying Term Insurance?
- 2 Why are the claims rejected?
- 3 How is the claim settlement ratio calculated?
- 4 How to compare Claims Ratio when choosing the life insurance policy?
- 5 How much time does it take to settle a claim?
- 6 What can you do to increase the chances of receiving the death benefit?
Why is it Important to check the Claim Settlement Ratio when Buying Term Insurance?
When you are looking to buy a term insurance plan for your investment portfolio, you need to keep several factors in mind, one of them is Claim Settlement Ratio. Term insurance plans promise lumpsum amount as a death benefit to your policy nominees in case of your unfortunate passing. A higher claim settlement ratio means that the company is likely to process the claim and release the benefit amount to your loved ones, thereby serving the purpose of your investment.
Why are the claims rejected?
Most of the claims get rejected due to the following reasons:
- An intentional attempt to cheat by submitting false claims can lead to rejection. For instance, when a death claim is filed, even when the insured is alive.
- Non-disclosure of an existing medical ailment or occupation details at the time of policy purchase can result in a claim being rejected
- Non-disclosure of smoking history and alcohol consumption at the time of buying the policy
- Non-payment of premium can result in policy lapse
How is the claim settlement ratio calculated?
The term insurance claim settlement ratio is an indicator of company trustworthiness. It tells you about the number of claims that the insurer paid as compared to the number of claims received in the same year.
How to compare Claims Ratio when choosing the life insurance policy?
The purpose of buying a life insurance policy is to secure the financial interests of your family members in your absence. With a robust plan, you can help your dependents pay for their expenses and maintain the same lifestyle, should something happen to you. The claim ratio is the commitment that the insurance provider will honour the claim benefit to your loved ones.
At the time of purchasing the policy, you must take various factors into account, such as income, future requirements, and, most importantly, the claim ratio. Make sure that the insurer has a claim ratio above 90% when choosing the provider. You must also compare the claims payment process of insurancecompany along with other factors such as the average value of the claim, turnaround time, and availability of the dedicated claims officer before purchasing the life insurance.
If the company offers low premiums but have a poor claim settlement ratio, then avoid purchasing your policy from them.
How much time does it take to settle a claim?
Once the insurance provider receives the claim request, they assess the documents and settle the claim amount within the stipulated timeframe, usually within 30 days. The payouts are transferred as per the preferred mode of payment.
What can you do to increase the chances of receiving the death benefit?
Apart from checking the term insurance claim settlement ratio of the insurer, you also need to ensure that you do not make any false declarations when filing for claims. It is essential to be completely transparent about your medical history and income details. As long as there is no misrepresentation of facts, you don’t need to fear about the claims being rejected.
Term insurance is one of the best tax saving investments that help you secure your family’s financial interest. Online term insurance policies offered by insurance providers such as Max Life Insurance enable you to make an informed decision by checking the claims ratio, comparing plans, and selecting the ones that offer you maximum benefits at affordable premiums.