The claim settlement ratio refers to the number of claims settled against the number of claims filed. Therefore, it is one of the most important factors to consider while purchasing a term insurance plan.
Read on to know more about the claim settlement ratio.
A term insurance plan can provide financial protection to the policyholder’s family. In case the policyholder passes away during the tenure of the policy, then the insurer can pay a sum assured to his/her family. This sum assured can be used to meet regular and future expenses.
There are various benefits of purchasing a term insurance plan. It provides larger cover compared to other types of policies. Therefore, the policyholder can ensure higher financial security for his/her family. Furthermore, in case a person passes away untimely, his/her dependants might find it difficult to meet their life goals. However, if such a person has a term plan, then the insurer can provide a sum assured that can be used to achieve life goals.
But purchasing a term plan without any research is wrong. The individual must understand the plans and various factors while looking for the right policy. One of the most important factors to consider while purchasing a term plan is the claim settlement ratio.
What is the Claim Settlement Ratio?
The claim settlement ratio is the ratio that refers to the number of claims approved by the insurer against the number of claims received. The higher the claim settlement ratio, the higher the likelihood of the claim getting approved. For instance, if an insurance company has a claim settlement ratio of 95%, then it means that the insurer has paid 95% of the claims that were filed. Thus, it is recommended to purchase a term plan from an insurer with a high claim settlement ratio.
Why is the Claim Settlement Ratio Important?
Every person purchases term insurance in order to financially secure their dependants. The sum assured can ensure the family has the funds to meet future expenses.
But what happens if the claim gets rejected?
If a person purchases a term plan from an insurance provider with a low claim settlement ratio, then the claim can get rejected. In such a case, the dependants of the policyholder might face a huge financial burden. Thus, it is critical to check the claim settlement ratio of the insurance company and consider the one with a high claim settlement ratio. While looking for plans, individuals must compare the claim settlement ratio. Also, people should check the insurance company’s past performances.
How to Check the Claim Settlement Ratio?
Every year the Insurance Regulatory and Development Authority of India (IRDAI) publishes a yearly report of the insurance industry. This report consists of details like-
- The amount of premium received
- The number of policies sold by the insurance company
- The claim settlement ratio
A term plan is crucial for financially securing your family. Thus, check the claim settlement ratio of the insurance company before purchasing a plan.