Know Why Claim Settlement Ratio Is Important
Published On Feb 01, 2022 10:20 AM By InsuranceDekho
Table of Contents
- 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.
Frequently Asked Questions
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.
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.
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%
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.
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.
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.
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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.