The life insurance claim settlement ratio is an important factor to consider when looking for a life insurance policy. It shows how successful a particular life insurance provider is when it comes to fulfilling claims. When you compare life insurance providers based on their claim-settlement rates, you can see which ones have more experience with handling claims effectively and making them easy to settle.
A claim settlement ratio (also known as CSR) can be defined as a percentage of the overall number of claims duly settled by any insurance-providing company over the total filed number of claims in a given year. It serves as a barometer of their trustworthiness. In principle, the higher this ratio is, the more dependable the insurance. The entire purpose of purchasing life insurance is to provide financial protection against unanticipated events. Nevertheless, if the insurance does not recognise your claims, the objective is destroyed. If, on the other side, the insurer fulfils the majority of claims, your household is more certain to have a straightforward, transparent, and trouble-free claim procedure. You may so be confident that your family members will not have a difficult time obtaining the cash provided.
The claim resolution ratio demonstrates their willingness to pay the money guaranteed to you or to your beneficiary. If your supplier has continuously maintained a high claim settlement ratio over a long period of time, they are unlikely to renege on their compensation obligation.
Life insurance claim settlement ratio can be computed with the following factors in hand:
Now, the formula comes as
A = (B/C) x 100
whereA = Current claim settlement ratio
B = Total claim settled annually
C = Total claim filed annually<
For instance.
Company ABC offers life insurance products to its customers. Last year, 500 life insurance claims were filed against the company. Out of these 500 life insurance claims, 200 claims were settled by the company.
So, for this last year, the claim settlement ratio of Company ABC
= (200/500) x 100
= 40%.
When purchasing a life insurance policy, you must consider a number of factors before settling on the best insurance provider for you. You must learn about the insurance provider's numerous policies and coverages. You must understand how customers rate their products and consumer relationship administration. Nevertheless, many individuals overlook the importance of reviewing the CSR or claim settlement ratio, resulting in a significant error. Here are the main reasons why the IRDA claim settlement ratio matters:
| Insurance Provider | Claim Settlement Ratio |
|---|---|
| Max Life Insurance | 99.35% |
| Aegon Life Insurance | 99.25% |
| Bharti AXA Life Insurance | 99.05% |
| Life Insurance Corporation of India | 98.62% |
| Pramerica Life Insurance | 98.61% |
| Exide Life Insurance | 98.54% |
| Kotak Mahindra Life Insurance | 98.50% |
| Reliance Nippon Life Insurance | 98.49% |
| Bajaj Allianz Life Insurance | 98.48% |
| PNB Met Life Insurance | 98.17% |
| Aditya Birla Sun Life Insurance | 98.04% |
| Tata AIA Life Insurance | 98.02% |
| Aviva Life Insurance | 98.01% |
| HDFC Life Insurance | 98.01% |
| ICICI Prudential Life Insurance | 97.90% |
There are two major types of life insurance claims:
In death claims of life insurance policies, the claimant may pursue death benefits following an untimely death of the insured individual. In any situation, a sum insured amount is paid to the claimant following the insured's death. The money promised is given to the nominee or the legal heir only once the insurance company receives a valid notification of the insured individual's death.
The death notification comprises the insurance information, date of death, explanation of death, as well as policy terms under which that death claim is being investigated. Amounts obtained as a death benefit from any life insurance provider are tax-free in the hands of the nominee.
Maturity life insurance claims are paid out when the life insurance plan matures. This implies that when the policy term finishes and the insured has lived through the entire policy duration, a specific sum is given to the insurer. Maturity life insurance claims are payable only after the insurance term has expired and the premiums have been paid on schedule. To get a maturity benefit, the insured must complete and sign the release paperwork.
According to the present Income Tax Act, the sum received through the maturity benefit is tax-free under Section 10(10D), provided the sum assured is at least 10 times the annualised premium.
In the end, the life insurance claim settlement ratio is an extremely important factor. While factors like price and coverage are an essential part of your decision-making process, you must also take into account a provider's track record when it comes to handling claims. A company with a good claim-settlement ratio will be much more effective than one with a poor one, and in some cases, this is the difference between just paying monthly premiums and fulfilling your goals for purchasing life coverage.
