Should you decide the term plan only on the basis of Claim Settlement Ratio?
The claim settlement ratio of any life insurance company plays an important role in determining the value and goodwill of the company. It is very important to check the claim settlement ratio before buying any life insurance policy, including the term insurance plans. But what exactly is the claim settlement ratio and how is it calculated? Take a look at this article to get your answer.
What is the Claim Settlement Ratio?
Before proceeding any further, let us first understand what is meant by the claim settlement ratio. The claim settlement ratio is nothing but the ratio of the settled claims in accordance with the total number of claim requests received. When the insurance company settles a majority of the claims, its claim settlement ratio goes up and vice-versa. You should ideally look to buy your term insurance plan from an insurer that has a high claim settlement ratio. If you do so, at the time of a claim, you or your family will not face too many challenges. However, the claim settlement ratio should definitely not be the only reason why you choose a particular term plan. There are various other parameters that you must consider when choosing your ideal term life insurance cover. Some of them are mentioned below.
Factors to Evaluate When Choosing a Term Insurance
As mentioned above, apart from the claim settlement ratio, there are many factors that you should evaluate when buying a good term insurance plan. They are:
- Budget
The different term insurance plans from the different life insurance companies have different price tags. As a result, you need to first make a budget and see how much you can spare towards your term life insurance plan. Everyone has a limited budget and you should never overshoot your personal budget. If the plan is too expensive, you may struggle to pay the regular premiums on time. This may lead to your plan lapsing and you losing the entire life cover. - Coverage Amount
Next, you need to see the life cover available on the policy. Even if the life insurance company offering the plan has a high claim settlement ratio, the plan may not suit you if the life cover is too low. You again need to sit down and evaluate your life insurance requirements. Once that is done, you will know exactly how large a cover you need. Get a suitable life cover and keep your loved ones financially secured in the best possible manner. - Convenience
The convenience with which you can buy the term cover and also maintain it is important. You should ideally buy the term cover from an insurer that has a strong digital presence. Not only can you buy the plan online at a cheaper rate, but you can also pay the subsequent premiums online and service your plan as and when needed with the click of a few buttons. Unless your insurance provider has a good website and mobile app that you can use, do not buy the plan from that company, irrespective of the claim settlement ratio. - Riders
The next important factor to consider is the availability of riders. Riders are add-on covers that you can purchase along with the basic term life insurance plan. Riders increase the scope of cover. Look for a life insurance company that offers a wide range of riders for you to choose from. This will make it easier for you to have the most effective and flexible term life insurance cover. If the insurance provider has just a few riders on offer, you may not find the ones you need and that won't help you to make the overall term cover suitable and perfect. - Coverage of Liabilities
And finally, you should look for a term plan that wholesomely covers all your financial liabilities. The life cover should be large enough to provide for your family, to clear all your unpaid loans, to pay for your child’s education, etc. If you cannot find a term cover that is large enough, you need to look at the plans of a different company, as buying an insufficient term insurance policy is practical of no use.
If you keep the points mentioned above in mind when buying your term plan, you will surely get the best coverage.
The Bottom Line
The claim settlement ratio is one of the most important components to consider when buying term insurance. After all, a life insurance company that has a high claim settlement ratio is more likely to pay the claim amount to your loved ones after your demise. However, as we saw, there are other important factors that also determine how good a plan is. So make a proper list of your requirements, compare the term plans online and find a good term insurance plan that matches all your needs from a company that has a good claim settlement ratio.