Unforeseen circumstances can often have a grave impact on the financial health of a person or even an entire family. That is why the importance of life insurance cannot be overstated. In the event of the demise of the financial provider, life insurance policies provide his or her dependents with a much-needed financial safety net.
However, not all life insurance policies are alike. Some offer additional benefits, some offer flexibility in tenures, while others offer economic premiums. With the variety of insurance products in the market, it can be difficult for insurance-seekers to narrow down on the policy that best meets their needs.
This is where an important feature known as the Claim Settlement Ratio comes in. It is an objective, numerical feature that can help you make the crucial decision between which life insurer you should opt for. Here is all you need to know about the Claim Settlement Ratio.
The Claim Settlement Ratio of an insurance company is the proportion of insurance claims paid out by an insurer during the financial year. This highlights the importance of your life insurance policy since having your claims reliably filed and settled is a crucial aspect of your policy.
The Claim Settlement Ratio is determined in the form of a percentage and represents the number of claims settled by an insurer against the total claims filed.
In general, the Claim Settlement Ratio of an insurer is viewed as an indicator of its overall claim-solvability and risk management ability. The higher the Claim Settlement Ratio of an insurance company, the better.
The Claim Settlement Ratio of an insurer is calculated using the formula given below:
Claim Settlement Ratio = (Total no. of claims approved/Total no. of claims received) x 100
This result is represented in the form of a percentage. Let us assume that an insurance company has a Claim Settlement Ratio of 70%. This means that for every 100 claims received by the insurer, 70 claims are settled and paid out.
It is important to keep in mind that a Claim Settlement Ratio is not just an aggregate of claims paid out for life insurance policies, but all forms of insurance offered by an insurer.
The importance of life insurance lies in the assurance that in the unfortunate event of the demise of the insured, his or her beneficiaries will be able to claim the insurance coverage. This, in turn, will help them look after their current and future financial needs in the absence of the insured. This is the primary agreement made between the insurer and the policyholder.
Having said that, there are certain circumstances under which the claim might not be paid out. Some of these factors might be related to the insured. These could be missing or incorrect information while filling out forms, or hiding one’s medical history while availing life insurance policies life insurance policies. Other reasons for claim rejection could also be related to the insurer, such as incompetent practices and low trustworthiness.
At the end of the day, life insurance policies can only be as reliable as the insurance company that provides them. Thus, the Claim Settlement Ratio helps an insurance-seeker make an accurate judgment of the trustworthiness and competence of a potential insurer.
Every financial year, the Insurance Regulatory and Development Authority (IRDAI) in India issues the Claim Settlement Ratios for every insurance company in the country. A high Claim Settlement Ratio can help you determine that a company can be depended upon to provide the promised claim to the beneficiaries of the insured. It also indicates that the insurance company has a high customer satisfaction experience and a strong underwriting procedure.
With a Claim Settlement Ratio as high as 94.04% (for the year 2018-2019 ), the life insurance policies at Canara HSBC Oriental Bank of Commerce Life Insurance are among some of the most reliable and dependable in the industry. In particular, the iSelect Star Term Plan offered by them not only offers a convenient claims process but a host of unique features as well.
You can avail from a wide range of add-on riders such as Accidental Death and Disability benefits that provide greater coverage and long-term protection. You also get to choose from a variety of payment options as well flexibility in tenures, such as coverage up to age 80.