Claim Settlement Ratio - Life Insurance Claim Settlement Ratio

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Life insurance refers to an agreement between the policyholder and the insurance provider where the provider agrees to make payment of the sum assured agreed on the policy at the time of the death of the insured according to the conditions included in the document of the policy.

The policy sum assured is also known as the death benefits. The insured individual makes payment of the premium periodically for keeping the insurance plan active. The insured nominates a beneficiary for receiving the proceeds of the insurance policy.

Now, that we have discussed the basics of life insurance, let us see what exactly is claim settlement ratio.

The claim settlement ratio of an insurance provider is the amount of claims they have settled against the amount of claims filed. The higher this ratio is the better is the insurance provider. While selecting your provider, you should check this ratio. There would be no point in getting a life insurance plan if the insurance provider rejects the policy claim filed by your beneficiary. Therefore, you must make sure that the insurance provider owns a good life insurance claim ratio. 

Who can Claim the Life Insurance Plan?

Only your nominees or beneficiaries are allowed to claim the proceeds of your life insurance plan. Even if you are a legal heir and are not designated as the nominee, then you are not eligible to claim the proceeds of the plan. 

What makes life insurance claim ratio important?

This ratio is the number of claims that the insurance company passes in a particular period of time. It is an important aspect to keep in mind before selecting an insurance policy. Therefore, one must always remember taking a look at the claim settlement ratio before purchasing life insurance, health insurance, or any kind of savings plan such as ULIPs.

Life coverage is a serious thing. After all, the policyholders trust a life insurance provider for securing their family. For making sure you select the correct company, investors look at the claims settlement ratio, a metric that shows the total amount of claims that a company accepts.

The calculation of claim settlement is reflected in the form of percentage and is very easy to understand.

Claim Settlement Ratio is equal to the total amount of approved claims divided by the total amount of received claims

For the insurance buyers, the life insurance claim ratio is like an objective yardstick for determining which provider is the most reliable. Most of the financial advisors recommend checking the record of claim settlement of any insurer over the highest benefits and lowest premiums. 

What are the reasons for the claims getting rejected?

While selecting the insurer, it is essential to have an understanding of the claim process of the insurance plan so that during an emergency, your claims can be settled easily and conveniently. One way of determining the claim process is by knowing the reason for the claims getting rejected.

1. Incorrect or incomplete information

While filling up the forms for your life insurance policy, you need to double-check the details that you have written down. This is done for making sure that during the claim process, your application gets reviewed and the information given by you remains the same at the time of the claim process. In case this information turns out to be faulty or misleading, your claim might get entirely rejected.

2. Careless behavior regarding your life insurance

It is crucial to research before buying. Lots web aggregators allow you to make quick comparisons between the features and costs of different plans. If you purchase an insurance plan without doing proper research, there are chances you may end up having a plan that is average and is not suitable for your needs.

3. Lapse of Policy

The real threat to claim settlement is the lapse of the policy. Most of the insurance providers offer a grace period for paying your premium on time. Buy the claims will not get processed in case the policy does not get renewed within this grace period.

4. Not disclosing the medical details

Amongst the most important factors for disclosing the information is providing the correct medical history. Your habits like smoking, alcohol consumption, or any pre-existing illness must be shared with the insurance company so that at the time of claim settlement there aren’t any issues.

Things to Keep in Mind

  • The measurement of the percentage for life insurance claim ratio includes all the products of the insurance company and not any one of them.
  • Another important thing about this ratio is on the finances of the insurance company. Higher the ratio, the better it is in the eyes of the customers and hence, better finances.
  • It also reflects that the insurance company cares for the loved ones of the customer and attends them properly during their tough times. 

The life insurance claim ratio is an important aspect to be kept in mind because it shows the trend of settling claims of the insurance provider. You should compare claim settlement ratios of the insurance providers before settling for one.

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