Life insurance plays an important role in every financial planning strategy in India. It’s not just an ingredient; it serves as a key safeguard for securing one’s future. It is important to understand the focal role of life insurance in protecting your loved ones from unexpected life events, especially due to the absence of a strong social security net in India. It is not only important to include life insurance in your financial plan, but also a necessity. The mantra individuals should follow when developing a financial plan should be ‘to protect and to save.’
As individuals realize the importance of including life insurance in their finances, choosing the right life insurance provider can be crucial. Life insurance products are bought for a long time and changing mid-way is not an option as premiums increase with age.
Life insurance is a promise made by the company, on behalf of the policy holders, to provide financial security to the family in their absence. Therefore, choosing wisely means having a strong and reliable insurance partner to support your financial plan. This begs the question, what elements should you consider when choosing a life insurance partner?
The quarterly claim settlement shows consistency
Usually, when individuals buy life insurance, they focus on policy details such as benefits, features, premiums, and the annual claim settlement ratio. They may also depend on advisors, agents, family or friends and social media for guidance. Since reliance on the annual claim settlement ratio can be misleading, individuals should study the consistency with which the insurer settles claims throughout the year. Therefore, it is necessary to evaluate the claim settlement ratio on a ‘quarterly’ basis.
The claim settlement ratio represents the proportion of claims settled against the total number of claims received during the period. For example, an insurance company receives 100 claims in a quarter, of which 98 are settled. The claim settlement ratio in this case is equal to 98%. A higher ratio means the insurer’s commitment to fulfill its promise, ensuring that the nominees receive the results of the claim in their time of need. After all, you bought life insurance to provide financial security for your family.
Estimate settlement settlement time
Another aspect that individuals should evaluate with the claim settlement ratio is the average turnaround time to settle claims. What really makes the claim settlement ratio more powerful is when it is studied together with the turnaround time of life insurers in settling claims. This refers to the amount of time it takes an insurance company to settle claims. For example, life insurers have implemented service initiatives such as ‘Claim for Sure’ which settle eligible claims within a day after all documents have been submitted.
While declaration of claim settlements is mandatory for insurance companies, declaration at the time of settlement of claims is purely voluntary and customer-friendly life insurance companies do it in their voluntarily and as a matter of transparency.
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The combined effect between the claim settlement ratio and turnaround time presents a comprehensive view of the insurer’s performance. The high claim settlement ratio coupled with the fast turnaround time illustrates the reliability of the insurer not only in settling claims but also ensuring that nominees/claimants receive their due payments promptly. .
Life insurers and customers have equal responsibilities
The size of life insurance in a financial portfolio cannot be overstated. When choosing a life insurance provider, individuals should focus on those with high claim settlement ratios and fast turnaround times that serve as strong indicators of reliability and commitment to serve policy holders diligently.
The responsibility is not exactly on the shoulders of life insurers, customers must ensure that all health and material information is truly disclosed at the time of purchase. This will ensure a smooth claim settlement process for the nominee.
In essence, a careful mix of these metrics offers a comprehensive assessment, ensuring a safe and reliable financial protection for loved ones in uncertain times.
Amish Banker, Senior Executive Vice President, Customer Service & Operations, ICICI Prudential Life Insurance Company Limited
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