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What All Should You Know About Claim Settlement Ratio?

Updated On Jul 19, 2021

If the life assured passes away, a life insurance policy ensures the financial security of his/her family. As a result, it's essential to choose the ideal life insurance coverage to match your needs at a reasonable cost. Furthermore, to avoid any problems in an unexpected event, it is crucial to pick a reputable insurance company for the policy contract. When comparing different insurance, some factors might be considered. For example, the claim settlement ratio is an important indicator that reveals the insurance provider's reputation. Continue reading to learn more.

What is a Claim Settlement Ratio?

The claim settlement ratio (CSR) is the percentage of claims that the insurance company settles. A higher proportion is preferred because it demonstrates the insurer's dependability and plausibility. When multiplied by 100, it represents the total number of claims paid in a given year divided by the total number of claims filed in the same year.

How Consistent Should the Ratio Be?

The stability of the insurance provider's claim settlement ratio is essential since the range provides a better indication of the company's claim rejection record. As a result, it's a good idea to look at the company's claim settlement ratio over the last five years. Furthermore, a smaller range indicates that the organisation is dependable. A range of 91-95 per cent, for example, is preferable to 86-93 per cent.

Why is it Important While Purchasing Term Insurance?

The primary goal of a life insurance policy is to give death benefits to the family of the deceased life assured. If the insurer has a low credit rating, it demonstrates a lack of commitment to the contract and negates the entire point of the contract policy. If the family's claim is denied because the deceased life assured was the family's sole breadwinner, the situation becomes even worse. In this scenario, the coverage was their sole option for getting out of debt. As a result, it's a good idea to look at their claim settlement ratio while obtaining insurance from a firm. As previously said, a higher settlement ratio demonstrates the insurer's trustworthiness. So, if the company's percentage is greater than 95%, it suggests that 95 out of 100 claims have been settled. 

What is the Claim Settlement Process?

You can report the claims in person at the branch or the central office and online via SMS and email. The next stage in the claim processing procedure should be short and straightforward. The company's reputation is enhanced by a short average turnaround time in settling disputes. The claim should be addressed as soon as possible with the family after underwriters have assessed and approved documentation.

How to Avoid Claim Rejection?

The life assured should give the insurance company all of his/her personal and professional information. Furthermore, any information related to a pre-existing condition or if the life assured has a family history of the illness should be disclosed when the policy is purchased. If the company discovers that the life assured suffered from a critical disease that resulted in his/her death, the firm has the right to deny the nominee's claim. Furthermore, before purchasing a plan, it is advisable to thoroughly read all of the policy's terms and conditions to avoid any such situation. 

Take Away

As previously stated, the claim settlement ratio is an essential factor in picking your insurance provider. However, it should not be the only reason determining your decision; other factors such as the sum assured, additional benefits, and so on should also be considered. To make a better-informed selection, you can also visit a financial expert or an insurance agent.

Also read 

Terms and Conditions for Life Insurance Riders

Crucial Mistakes To Avoid While Purchasing A Term Insurance Plan

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.             

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