As the term
insurance plans is a plain insurance policy without any embellishments, it is
very important to know the yardstick to measure one policy over the other.
There are two basic standards that can help you to cherry-pick
the best insurance company:
- Compare the Claim Settlement
Ratio of the insurance provider
- Compare
the premium offered
My previous editorial on Term Insurance- A necessity!, can help you to
understand the fundamentals of Term Insurance policy and how it is better than
other insurance plans.
In this article, I present you 5 famous term
insurance plans offered by different insurance providers in India.
Let us first understand the meaning and significance of Claim Settlement
Ratio before you zero in a term insurance plan.
Claim Settlement Ratio:
As we all know, insurance is a life protection tool. In case of
unfortunate demise of the policy holder, the family members/ nominee approach
the insurance company to claim the sum assured.
As an expectation, the insurance company, after completing the
pre-requisites, should hand over the claim to the family of the deceased. But
it does not happen always.
Insurance regulator IRDA’s annual reports for 2012-13 reveal
that of the total 23 private life insurers, only five have a claim-settlement
ratio of over 90% (in terms of number of policies). The figure tells you that
many insurers are stingy when it comes to passing on the benefits to nominees.
The claim
settlements ratio of an term
insurance company indicates the percentage of claims that have been
approved out of total claims that are unsettled.
Higher claim settlements ratio indicates that a life insurance
company is making the payments when they are outstanding, in this case a
premature death.
It is very important
for the insurance buyers especially for those who are availing the term plan to
verify the claim settlement ratio of a company before the commencement of their
policy.
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