Is A Good Claim Settlement Ratio Enough To Determine The Best Term Plan?
A term plan can benefit a person and their family in several ways. From affordable premiums to tax benefits, term insurance has various benefits. But another essential feature to consider when purchasing a term policy is the insurer’s claim settlement ratio.
A claim settlement ratio acts as an indicator of the insurer’s credibility. If they have a high claim settlement ratio, most people tend to place more trust in the company. A higher claim settlement ratio generally means higher chances of getting your claims settled effectively and on time.
What Is A Claim Settlement Ratio, And Why Is It Important?
A claim settlement ratio is the percentage of total claims received by the insurer versus the total number of claims they have successfully settled in a financial year. It indicates their credibility and is a key factor in determining a customer’s decision to purchase a term plan from that insurer.
Some of the best term life insurance agencies in India have a claim settlement ratio of above 95%.
You can check your insurer’s claim settlement ratio through the Insurance Regulatory and Development Authority of India’s (IRDAI) official website. They release the claim settlement ratios of all life insurers every year.
How Long Does It Take To Settle A Claim?
An IRDA claim settlement ratio can also tell you how long the insurer can take to settle your claim. According to the regulatory timelines prescribed by the IRDA, the maximum time an insurer can take to settle a claim once all the documents have been submitted is 30 days.
The insurance provider’s claims team will verify all the documents during this time. The eligibility conditions for claims settlements will differ concerning the insurance company.
Some of the best insurers even offer one-day claim settlements for some policies. For example, Tata AIA term plans offer an Express Claim feature where they settle claims in under 4 hours.
Some Drawbacks Of The Claim Settlement Ratio
A claim settlement ratio isn’t an exact number. It’s only an estimated figure in terms of percentage – hence, you don’t get much clarity on how many claims the insurer has rejected for the year.
For example, if the insurance firm receives 1,000 claims and rejects 100 of them, then its claim settlement ratio will be 90%. However, if it receives 10,000 claims the following year but rejects 500, the claim settlement ratio will be 95%.
However, by submitting the correct documentation and providing the right information on your policy proposal form, you can ensure that your claim will not be rejected when your nominee needs to file a death claim.
What Features Determines The Best Term Insurance Plan – Is A Good Claims Settlement Ratio Enough?
Here are some other features to look for in a term policy:
- Persistency Ratio
This is an estimated percentage of how long customers stay with the insurer. A high persistency ratio implies that the insurer has successfully maintained a steady customer base..
- Regular Income Payout Option
Many term policies offer to pay out the death benefit as a regular income to the nominees. A good term insurance offers this feature so that policyholders can easily plan their financial welfare.
- Disability Cover
A good term policy will either offer an inbuilt or an optional accidental disability cover under the offerings. Such a rider or coverage can be useful for securing your family’s financial wellbeing in the event of loss of income due to an unexpected event.
- Critical Illness Coverage
A critical illness cover can also be available under a term plan, either as an inbuilt feature or an optional rider. A critical illness rider added to a term plan can secure you and your family against the financial implications of a sudden medical emergency.
A good claims settlement ratio is important and should be considered when looking for insurance companies. However, checking other features alongside the IRDA claim settlement ratio, like the ones listed on this blog will help you make a better decision.