Decoding claim settlement ratio

Once upon a time, I used to despair that the mass of Indian savers would never come upon the realisation that term insurance was the only kind of insurance product they needed. However, those days are past. Selecting the right type of life insurance product has now become a cakewalk - you simply need to buy a term plan. Unlike other hybrids such as ULIPs and endowment plans, pure term plans are quite affordable and in essence, a true insurance product. However, it is not easy to choose a term policy from the available options. Different companies make different claims on the superiority of their term insurance plans. While some claim that their term insurance provides a high amount of life cover at a negligible cost, others brag about waiving off the premiums in the case of a disability or the diagnosis of a serious illness. So, which one is the most trustworthy to take care of your loved ones if you are not around? To help the choice, let me discuss the Claim Settlement Ratio - an important aspect to consider when it comes to selecting a term plan. Put simply, claims settlement ratio denotes the number of instances in which the insurance company has paid the sum assured out of the total number of such requests received by it on the death of the insured. If an insurance company has a claim settlement ratio of 95 per cent, it means that out of the 100 claims filed, the insurance company has honoured 95 and rejected five. Consider it as a metric that tells you the probability of the insurance company paying up

This article was originally published on November 07, 2019.