Term insurance is the most affordable and convenient insurance instrument available in the market. But since there are multiple insurance providers offering term insurance, choosing the right insurer can be a daunting task.
When choosing the insurer, certain factors must be taken into consideration. One of these factors is the claim settlement ratio. In this article, we will be specifically discussing the term insurance claim settlement ratio.
What is the Claim Settlement Ratio in term insurance?
The claim settlement ratio (CSR) in term insurance is the total number of claims approved by the insurer against the total number of claims received in the financial year. This ratio is measured every year and the said details are available on the official website of the insurer.
Know for a fact that the claim settlement ratio is calculated for all insurance instruments and is not specific to term insurance only. To understand the claim settlement ratio, consider the following example.
Let us assume that the insurer received 1000 claims in the given financial year. It then settled 950 claims, rejected 40 claims, and is yet to decide the fate of the remaining 10 claims. Based on this information, the claim settlement ratio of the insurer will be 950/1000 = 95%, the claim rejection ratio will be 40/1000 = 4%, and the claim pending ratio will be 10/1000 = 1%.
Importance of the Claim Settlement Ratio
According to the Insurance Regulatory and Development Authority of India (IRDAI), the claim settlement ratio is published as a percentage every year. When you compare term insurance policies before purchase, you must have access to the claim settlement ratio of the shortlisted insurers. This way, you will be able to choose the best term plan in the market.
Also, make a note that the claim settlement ratio is not only applicable to the term insurance plan but is considered as an essential parameter for other insurance instruments as well.
Factors influencing term insurance Claim Settlement Ratio
The following are certain actions or events performed by potential customers of the insurance provider can in turn have an impact on the claim settlement ratio of the insurer.
When buying insurance, it is essential to share valid information with the provider. Any health-related concerns should be mentioned when buying the policy. In case you happen to hide certain adverse conditions that you may be suffering and the insurer finds out about it later, it can impact your insurability and claim rejection. Hence, non-disclosure can have a negative impact on CSR.
If the insurer suspects any fraudulent activity or the authenticity of the policyholder, it may end up rejecting the claims made. Thus, this will affect CSR negatively.
Ignorance of the policyholder –
At times, the policyholder may not understand the terms and conditions mentioned by the insurer. Although that is quite unfortunate, it is always recommended to go through the contents of the policy carefully before buying it. Any slight inconvenience or misunderstanding in the policy needs to be addressed immediately before it impacts the CSR.
Nomination update/mistake –
In case the policyholder fails to mention any nominee in the policy, it will have an impact on the insurer. This is because when processing the claim made, the insurer will have difficulty in determining the legal heir. No claims will be settled in case there are disputes regarding the nominee.
When buying term insurance, you should be aware of the claim settlement ratio of your chosen insurer. It happens to be one of the best parameters that help understand the quality of the insurance product as well as the insurer. You should ideally choose an insurer with a CSR of over 80 per cent.
Along with the CSR, other factors such as the benefits and features offered, the premiums charged, and the exclusions of the policy should be taken into consideration when buying term insurance. Compare different policies online based on these factors and then choose the one that best suits your needs.
If you are looking for term insurance to secure your family’s future, consider buying the Bajaj Allianz Smart Protect Goal Term Insurance at Finserv MARKETS. Bajaj Allianz Insurance has an impressive claim settlement ratio of 95.01%, which makes it one of the top ranked insurance companies in the industry. With this plan, you can avail a host of term insurance benefits and features such as comprehensive coverage of up to INR 1 crore, add-on covers to suit your needs, affordable premium rates, and more.
You can read more about the term plan by visiting Finserv MARKETS online.
Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all in one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers that are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments, and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours of product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.