Is A Good Claim Settlement Ratio Enough To Judge A Term Insurance Plan?

Purchasing term life insurance is a significant financial choice that will affect you for the rest of your life. Since you won't be able to change your mind later or repeat the process, you'll want to put your best foot forward. As a result, the insurer you select must at the very least meet your requirements and have a proven track record of keeping commitments. The claim settlement ratio is a strong indicator of an insurer's historical performance. However, this ratio may not be sufficient to reveal all aspects of the insurer's performance.

What is the Claim Settlement Ratio?

The percentage of claims settled by a life insurance company compared to the total number of claims received is referred to as the claim settlement ratio. This measure is always expressed as a percent. For example, if a company's claim settlement ratio is 95 percent, it has settled 95 of every 100 claims received. A company's claim settlement ratio can give you a good picture of how many claims it settled in a given fiscal year. However, it should only be one of several considerations taken into account while making a decision. It's not a good idea to judge a firm merely on its claim settlement ratio. Other variables to consider while picking a firm include service quality, policy advantages, plan variety, and so on.

Must Read: Which Cheap Term Life Insurance Gives Best Returns?

What are the Other Factors That Can Be Considered While Choosing a Term Insurance Provider?

Here are some other factors to consider while choosing an insurer.

1. Persistency Ratio - The insurer's persistency ratio reveals how long its customers stay with the company. A greater persistency ratio indicates that the insurer is diligent in keeping consumers informed and policies active. As a result, you can rest easy knowing that your life insurance will continue to be covered while you are busy with your life and job.
2. Regular Income Payout Option - Your family will require a regular source of income to cover living expenses as well as a lump sum payment to pay off debt and invest for the future. If your term insurance just pays them a lump sum, it will be difficult for them to save up money for regular income. If the benefit is paid out to the family as a monthly income through the term plan, they can simply invest the lump sum money. This choice makes life easy for them following the claim and protects them from any financial miscalculations.
3. Disability Cover - Another risk that can impair your ability to earn money is disability. Therefore, you should have this additional coverage as part of your term insurance policy.
4. Critical Health Coverage - The death of a breadwinner is one of several situations in which a family might require financial assistance. Even if you have a life-threatening illness that requires expensive treatment and is unexpected, you will require financial assistance.

Take Away

Claim settlement ratio is now one of the finest indications accessible to customers for determining a life insurance company's quality. A corporation with a claim settlement ratio of more than 80% is deemed good because it has paid out on the majority of its claims. A company's reasons for rejecting a claim could be legitimate. As a result, it's a good idea to think about other considerations before settling on a single organisation. You can compare the benefits and drawbacks of several companies and pick the finest one that fulfils your needs.

Also Read: Is There Any Good Term Life Insurance With Return Of Premium?
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.