The Best Term Insurance Company: Claim Settlement Ratio and More
When it comes to choosing the best term insurance company in India, there isn't a single winner. Different companies excel in various aspects, and your decision should be based on what meets your specific needs and priorities. This article will guide you through the process of selecting the right term insurance company, with a focus on the crucial parameter of Claim Settlement Ratio.
Priority Over Preference
When I was looking for a term insurance plan, my primary objective was not just to get a good insurance. Rather, I wanted a plan that suited all my needs. For this reason, I chose IDFC First Bank. Their team assisted me in finding the plan that was best suited to my requirements. My advice is to first determine your priorities and then find the company that meets them.
Quality of a Term Insurance Company
The quality of a term insurance company is mainly determined by its Claim Settlement Ratio. While other aspects such as service quality are also considered, the Claim Settlement Ratio remains the primary parameter. This is because the main objective of a term plan is to provide claim payout to your family without any hassle.
Why Claim Settlement Ratio Matters
It's a common misconception that a term plan guarantees a claim payout. However, this is not the case. The Claim Settlement Ratio is the ratio of claims settled to claims registered in a life insurance company. Not every company has a 100% claim settlement ratio, and some do not even come close. This means your claim might be rejected, especially if it is an early death claim within the first 3-5 years of the plan's purchase. Avoid this risk by choosing a company known for its high claim settlement ratio.
Latest Claim Settlement Ratio
The following table shows the Claim Settlement Ratio for the latest quarter and last quarter of this financial year (23-24). However, it is important to consider a more detailed analysis over a longer period to truly understand a company's quality.
Detailed Data Analysis
To properly evaluate a company, we need to look at the detailed data of the last financial year (22-23). A common mistake is to focus solely on the percentage of the Claim Settlement Ratio. It is equally important to consider the base on which the percentage is counted.
For example, settling 99 out of 100 claims is not as impressive as settling 980 out of 1000 claims. The higher the amount settled, the more financially stable the company is, as it can handle more claims.
Historical Data of Claim Settlement Ratio
The following table provides the historical data of claim settlement ratio for the period of 10 years from 09-10 to 18-19. Consistently settling claims with a high ratio indicates the company's financial strength and capability to handle more claims over time.
Closing Remarks
The Claim Settlement Ratio is the most critical factor in choosing a term insurance company. A company with a high Claim Settlement Ratio is considered the best in terms of quality. By choosing the right term plan, you can ensure a smooth settlement of your claims.
Based on my analysis, ICICI Prudential is the best company to purchase a term plan from. While LIC has the highest claim settlement ratio with the largest base, the cost of term plans from LIC is significantly higher than that of ICICI Prudential.
Armed with this information, you can make an informed decision that suits your needs and provides peace of mind in the event of a claim.