Some people like living spontaneously, and others take life very seriously and plan to ensure that their loved ones are cared for, even in their absence. One of the most common ways people prepare for the future is by purchasing term life insurance. It provides financial security to your family members in case of your premature death, ensuring they are not left in a financial crunch.
When purchasing a term life insurance, people research the plan thoroughly to ensure it aligns with their requirements. However, it is equally essential to research the insurance provider and their record of claim settlement ratio.
The percentage of claims an insurance company resolve is the claim settlement ratio. When buying term life insurance, it is an essential factor to consider as it shows the insurance provider’s ability to pay claims promptly and fulfil its obligations to policyholders.
Let us know why you should buy a term life insurance plan from an insurer with a high claim settlement ratio to make an informed decision.
What is Term Life Insurance?
Term life insurance is a means to secure the future of your loved ones in case of your sudden death. It offers coverage for a specified term. By getting term life insurance, policyholders get to pay the same premium rates for the entire term of the insurance and receive the same insurance coverage throughout.
In case of the policyholder’s untimely demise, the sum assured is paid to the insurance beneficiaries, who can then use it to maintain their standard of life or pay for other household or living expenses. Individuals can also opt for critical illness insurance, which will cover the cost of treatment if diagnosed with a critical illness.
Now that we have discussed what is term life insurance. Let us take a look at the claim settlement ratio.
What is a Claim Settlement Ratio?
The claim settlement ratio estimates the proportion of claims cleared by an insurance company in a given financial year against the total number of claims received. It is crucial to consider it while choosing an insurance company as it shows the insurer’s history of settling claims. Therefore, the greater the claim settlement ratio, the better the history of paying claims more efficiently.
To obtain the claim settlement ratio: divide the total claims settled by the total claims received and multiply the result by 100.
Why Choose an Insurer with a High Claim Settlement Ratio?
Following are some reasons why you should buy a term life insurance plan from an insurer with a high claim settlement ratio:
- Timely and efficient claim settlement: Insurers with a high claim settlement ratio are more reliable in speedily and efficiently clearing up claim settlements. Such insurance companies settle claims without much hassle and delays, thus offering financial aid to the listed beneficiaries of term life insurance. With a high claim settlement ratio, one can ensure their loved ones will receive the sum assured when you aren’t around to provide for them.
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- Reputation and reliability: A high claim settlement ratio indicates the company’s reputation, credibility and reliability in the hour of need. Choosing an insurer with a high claim settlement ratio ensures that you are in the hands of a company with a proven record of settling claims. A high claim settlement ratio also shows the insurer’s responsibility to provide exceptional customer service and maintain transparency in their services.
- Comparison of insurers based on high claim settlement ratio: A high claim settlement ratio is essential when comparing and contrasting different insurance companies. A higher claim settlement ratio shows that the insurer is more likely to settle your claim in case of your untimely demise. By comparing several insurers’ high claim settlement ratios, one can make an informed decision and choose the best suitable insurer according to your needs.
Final Thoughts
Therefore, when buying a term life insurance plan or any life insurance such as critical illness insurance from an insurer, check their claim settlement ratio. It will allow you to determine the credibility and reliability of the insurance provider while settling claims.
Now you can make an informed and intelligent decision by estimating a company’s claim settlement ratio, ensuring that your family members can live a financially stable life even if you are not around.
cover pic: Shutterstock
