What is the most critical factor to select a life insurance company?
Irrespective of whether you have shortlisted on a term insurance plan or a whole life insurance policy depending on your need, the next most critical question is to select the insurance company you can trust.
Answer : 007
The most critical factor to select a life insurance company is the Claims Settlement Ratio (CSR).
Let us see how claims settlement ratio is calculated.
Claims Settlement Ratio = Total Claims Approved (paid to nominees) / Total Claims Received by the Company.
While overall CSR is NOT the best way to decide on your life insurance plan, you cannot ignore it because it is one of the best available indicators as of today. Ultimately, you keep paying the insurance company throughout your life, with the hope that they will settle the claim in case of your family's need.
The CSR figures for 2012-2013 were released recently by IRDA on Jan 1, 2014. The data is as below.
While Claims Settlement Ratio is a good indicator, it does not indicate timeliness of claim payout, i.e. it is not enough to settle all the claims, but they need to be done quickly so that nominees are able to recover the financial loss in their families as quickly as possible. Claims should generally be paid to the nominee within 30 days of submission of all requirements (documents) asked from the nominee.
But before you make the final decision on the choice of life insurance plan, don’t restrict yourself to just Premium and CSR. Take a minute to check whether the company you have chosen is making profits or losses – that will give you the confidence to go ahead and buy your insurance plan.
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Cheers
Manoj Arora
Freedom can buy you....what money cannot !!
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