Term insurance is a life insurance policy in which the demise of the policyholder during the term plan results in the beneficiaries getting a death maturity benefit claim. Since the financial well-being of your family depends greatly on term insurance policies payout, it is crucial to check the claim settlement ratio when planning to buy term insurance.
What is the Claim Settlement Ratio?
The claim settlement ratio is the ratio between the number of claims settled and the number of claims received in a year. It shows the percentage of successful resolving of the claim if the policyholder files any claim. So any insurance company with a high claim settlement ratio indicates that it is financially stable and has a solid record of keeping its word to the policyholders and successfully giving financial security to the family after the demise of the policy.
It is calculated as:
|Claim settlement ratio = (total number of claims settled in a year / total number of claims received in a year) * 100|
The ideal claim settlement ratio is between 90-95%. However, the higher ideal claim settlement ratio means a higher trustable insurance company regarding financial support. Top term plans like Tata AIA Life Insurance have a high claim settlement ratio of 98.53%* (FY 2021-22). It indicates the company’s reliability.
Importance of Checking the Term Insurance Claim Settlement Ratio
There are several reasons why you have to check the CSR ratio of term insurance provider companies, such as
- Trust and Confidence
When you buy the term insurance plan, you know it is for your loved ones. So it will become more critical to select the company where you can show your faith that your family’s safety is in good hands. So when you see insurance companies with high claim settlement ratios, it means they have a good record of settling the claim.
- Financial Stability
The claim settlement ratio indicates the financial stability of the insurance provider. It means whenever your family or the beneficiaries claim the death benefits, there is a good chance that they will get instant financial support from the insurance company.
- Quick And Easy Claim Process
Higher CSR means you don’t have to make many efforts to get a claim against the term insurance plan. As a result, insurance companies with high CSR claims procedures are streamlined, and claims can be resolved quickly and effectively.
Furthermore, it means that your loved ones will not have to deal with unnecessary delays or inconveniences to receive the financial support they require.
- Compare Insurance Companies
Checking the claim settlement ratio of different term insurance providers helps you to compare the different insurance term plan providers. By analysing the claim settlement ratios of several insurers, providers are more likely to pay claims successfully. In addition, it can assist you in selecting an insurance provider with expertise and ensure you get the best coverage for your needs.
- Support And Cooperation From The Insurer
A good claim settlement ratio indicates that the insurance company cares about its policyholders and will work with them to ensure they are timely reimbursed for their loss. It also instils in policyholders the expectation that the corporation will expedite claim processing and settlement.
Now you know that evaluating the claim settlement ratio of term insurance is important before proceeding to any decision while purchasing any policies. Along with that, check the various factors and coverages so you can take the time to research and compare various insurance providers and plans. This is how you can make an informed decision and ensure that you and your loved ones are completely insured in the event of a disaster.