Why is Claim Settlement Ratio Important While Buying Life insurance?

In the event of the death of the life assured’s, life insurance ensures the family's financial stability. To meet your life insurance requirements at an affordable price, you should pick the best policy. Furthermore, an insurance provider with a good reputation is essential to avoid any trouble in the event of an unfortunate event. Comparing various insurers can be helpful in this regard. Claims settlement ratios, for instance, can be one of the measures of credibility of the insurance provider. Continue reading to learn more.

What is a Claim Settlement Ratio?

Insurance companies calculate their claim settlement ratio (CSR) based on the claims they settle. The more trustworthiness and plausibility the insurer demonstrates, the higher the percentage. It equals the total number of claims settled in the year over the total number of claims made in that year when multiplied by 100. 

Why is it Important While Purchasing Life Insurance?

Death benefits are provided to the beneficiaries of a life insurance policy by the insurer. It shows dishonour to the contract on behalf of the insurer to have a low credibility rate, which defeats the entire purpose of the contract policy. If the deceased life assured was the family's sole breadwinner, the situation becomes even worse if the claim is rejected. In this case, the policy was their only hope to overcome the financial strain. Therefore, while purchasing insurance from a company, it is advisable to consider their claim settlement ratio. As mentioned above, a higher settlement ratio shows the credibility of the insurer. So, if the company has a ratio above 95%, they must have paid for 95 out of 100 claims filed.

How Consistent Should the Ratio be?

It is essential to determine the claim rejection history of the insurance company based on its claim settlement ratio because it gives a better picture of the company's claim settlement record. Hence, it is recommended that you check the company's past claim settlement ratio. Smaller ranges also suggest a reliable company. It is better to have a range between 91-95% than 86-93%.

What is the Claim Settlement Process?

Online and offline claim reporting is possible through SMS and email. Claims can also be filed offline through the respective branch or the central branch. Processing claims should be straightforward and quick. A low average turnaround time in settling the claims reflects splendidly on the company. After the underwriters' assessment and approval of all documents, the claim should be resolved as quickly as possible with the family. 

How to Avoid Claim Rejection?
 

Providers of insurance should not be withheld any personal and professional details from policyholders. Further, the life assured should be informed of pre-existing illnesses or family histories of the disease at the time of policy inception. The company can reject the claim of the nominee if it finds out that the life assured suffered from a critical illness which eventually led to his/her demise. Furthermore, it is advisable to carefully read all the terms and conditions of the policy before purchasing a plan.

Top insurance companies with best claim settlement ratio for year 2019-20

Takeaway

Your insurer determines your rate based on your claim settlement ratio. In any case, it should not be your only determining factor and you must also take into account other factors including the sum assured, additional benefits, etc. If you want more information, you can seek the advice of an advisor or an insurance agent. 

Also read - Who Should Be Your Nominee For Your Term Insurance?