In your family, you might be the earning member. Since you might be the only breadwinner of the family, your family would be depending on you to take care of their financial needs. However, you can meet your family’s financial needs until you are alive. After your demise, you would not be around to provide for them. That’s where a term plan comes into play. If you have a term plan for your loved ones, you can ensure that they receive financial support even in your absence.
Since a term plan is essential for your family, you should select the right plan for your whole family. While choosing a term policy, you should consider various factors like premium, coverage, and so on. However, a claim settlement ratio can play a critical role at the time of purchase of a term policy. Before you purchase a term policy, let’s understand what a claim settlement ratio is in detail:
As the name suggests, a claim settlement ratio indicates the number of claims your insurer has settled in a year. In simple terms, it is the percentage of the total number of claims of your insurance company. The Insurance Regulatory and Development Authority (IRDA) might calculate the claim settlement ratio for each financial year in India.
A claim settlement ratio is an essential factor of consideration while purchasing a term policy. Therefore, let’s go through these top three reasons given below to help you understand why to consider a claim settlement ratio:
- To ensure the whole process is simple
As a policyholder, you should ensure the easy accessibility of the claim process for your family members. A complex claim settlement process can result in hassled decisions and delay at the last minute. The claim process should have not only a minimal turnaround time but also a quick claim settlement.
Usually, many companies might offer the usual three-step claim settlement process. The given below steps are simplified for your convenience:
- Report your claim, either online or offline.
- Submit the required documents to your insurer for verification.
- Wait for your insurance company to approve the claim.
- To understand the credibility of your insurer
The claim settlement record can represent the reputation of your insurance company in the market. Look for an insurance company with a higher percentage of claim settlement ratios. The higher the claim settlement ratio, the higher the credibility of your insurer.
While buying an online term plan, you should check the claim settlement ratio over the past 3-4 years. A consistent claim settlement ratio can be a good indication to choose the insurance company. For instance, any reputed insurer should have a claim settlement ratio ranging between 95%-97% in the market.
- To receive a quick approval
The immediacy of the claims can ensure your family wouldn’t have to wait to receive the claim amount. As a policyholder, you should choose an insurance company, which has a low claim processing time. For instance, if your insurer requires low processing time, their aim can be categorised into two major parts:
- It is to provide genuine services and long-term assistance.
- It is to improve their sales in the market.
As highlighted above, the financial security of your family can be one of the primary goals of your life. With term insurance, you can protect your loved ones over the long run with the timely payment of the sum assured. In addition to this, choose a company with a maximum claim settlement record of over 90%. Such companies can guarantee the financial protection of your loved ones in times of an eventuality.