IRDA Life Insurance Claim Settlement Ratio (CSR) - Meaning, Details and Frequently Asked Questions.

Closer home, India has witnessed almost eight million people get infected by the virus, the second highest number of cases in the world after the United States of America with ~ 1.2 lakh deaths. Even though the curve of new infections seems to be flattening, the total number of cases is still on the rise. Moreover, the possibility of a second wave cannot be overlooked given what is happening in the Western countries

While having life insurance is in itself a necessity, especially if you are the sole earning member of the family and have dependents, the prevailing situation makes it even more crucial. With COVID-19 increasing the risk of something unfortunate happening, it is of paramount importance to secure the wellbeing of your family by having a backup plan for such an eventuality. A life insurance plan just provides that backup.

Life Insurance Claim Settlement Rules

No matter how much detail you plan a safe future for your family, if they are not aware of how to make a claim under the life insurance plan, they may still struggle. Many individuals are not aware of an insurance claim process. Due to lack of this knowledge, many individuals are misled by incorrect or incomplete information and develop a wrong notion about insurance fearing that claims are not fulfilled by insurance companies. Since the beneficiary would still be recovering from the loss of losing a loved one, term or other policies usually have a seamless process with no hassles or difficulties. Here is what you need to know about making a term insurance claim:

1. Any claim under a life insurance policy is always raised by the nominee chosen by the policyholder - could be the wife, husband, offspring, sibling or even parents. Since the claim is filed after the life assured’s death, it is obvious that he or she will not be around to guide the beneficiary.
2. First and foremost, the beneficiary needs to inform the insurer about the death of the life assured. This should be done as soon as possible as it would ensure speedy processing of the claim. With insurers like Bajaj Allianz Life Insurance, you can even download the claim form online on their website without making a visit to their branch.
3. While filling out the claim form, be it in physical form or digitally, you may need some documents, which you should keep handy. These mainly include the life assured’s death certificate and the original term insurance policy documents.
4. After you file the claim form, the insurer may conduct their own personal investigation to ascertain the circumstances of death. This normally happens if the life assured dies within three years of policy being issued. You may have to provide a copy of the FIR and post mortem report if the life assured died an unnatural death.
5. From the date that the beneficiary submits all the details and documents along with the claim form, the death claim has to be issued within 30 days by the insurer as mandated by the Insurance Regulatory and Development Authority of India (IRDAI). If the insurer takes more time, it would have to pay penal interest on the claim amount to the beneficiary. 
6. However, if there is a need for further investigation, in that case the insurer can take another 60-90 days for the same.

One important thing to note is that some circumstances are excluded and may result in rejection of the claim. Therefore, it is important to read the policy document carefully before making any claim. For example, exclusions could include suicide as the cause of death.

Frequently Asked Questions

1. What is the Importance of Checking Claim Settlement Ratio before Buying Life Insurance?

The importance of a life insurance plan is immeasurable in a family that has only one earning member. In case the breadwinner loses his or her life due to an accident or illness, the whole family suffers emotional, as well as, financial stress. If you are always worrying about your family for the same reason then it is time for you to buy a life insurance policy. It will provide your loved ones the financial support they need in the time of emergency. Before you buy the insurance plan, do not forget to compare the term insurance claim settlement ratio of different insurers to understand which insurance company will be the best for you.

2. What is a Claim Settlement Ratio?

A claim settlement ratio of an insurance company is the number of claims settled against the number of insurance claims filed. When a life insurance policyholder passes away and an insurance claim is made, the insurance companies follow certain rules and conditions before settling the claim. Not every claim is approved as some of them might not meet certain policy requirements. The claim settlement ratio can be used as a measurement to determine if a certain policy is right for you or not.

3. What is the Formula to Calculate Claim Settlement Ratio?

Claim Settlement Ratio or CSR can be calculated by taking the total number of insurance claims settled by the insurer and dividing it by the total number of insurance claims received by the insurer.

Let’s consider the claims settled by the company are 90 and the claims filed by policyholders are 100 in a year,then the CSR of that insurance company will be:

CSR = Total no. of insurance claims settled successfully / Total no. of insurance claims filed by the policyholders= 90/100= 90%

4. Why Is Claim Settlement Ratio so Important?

When buying life insurance, you need to check various aspects before deciding which insurance company is right for you. You have to find out about the various policies and covers offered by the insurance company. You need to know how their customers review them in terms of services and customer relationship management. However, many people ignore the need to check the claim settlement ratio, which is a huge mistake. Here are two reasons why the IRDA claim settlement ratio is important:

1. Measure the insurer’s reliabilityThe life insurance policy is a big investment plan. You have to pay a good number of premiums over a long duration to avail of the benefits offered by the policy. So, if your claim is rejected for some reason in the future then that can seriously hurt your financial planning. The settlement ratio is a very reliable measurement indication that helps you know if a certain insurer is trustworthy or not. A favorable ratio indicates that the insurer is right for you.
2. Gives assurance about your dependent’s financial futureChecking the term plan claim settlement ratio is important to ensure the financial security of your family. The last thing any family can endure after suddenly losing a family member is the rejection of an insurance claim. It is your job as a policyholder to make sure that your family does not have to go through that trouble. With the help of the settlement ratio, you can make the right decision when buying a policy.

5. What to Look for in Claim Settlement Ratio?

1. A claim settlement ratio of more than 85% is a good sign, making the insurer trustworthy. But insurance companies having a high CSR of more than 90-95% is a better option.
2. You should refer to the persistence ratio of an insurer to know how persistent policyholders have been in renewing their policies. This shows the policyholder’s trust in the long-term insurance products and the services offered.

Conclusion

So in these uncertain times, bring some security to your life by opting for a life insurance plan. Since among other life insurance products, term insurance offers higher life coverage for the same amount of premium, you can be rest assured that your family would have enough money not only to make ends meet, but also to have a good and stable life.

Also read - Exploring Different Types Of Life Insurance Policies In India

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.