While you decide to buy a term insurance, you are bombarded with many numbers, features, and promises. Companies present you with low premiums, additional riders, and more options. But the one thing that really matters the most is the claim settlement ratio.
if you buy term insurance, the first thing that comes to your mind is the future of your family. You want to make sure that if anything happens to you, your family will receive the money without any trouble or delay. This is the point where the claim settlement ratio becomes significant. It indicates how often an insurance company grants claims compared to how often it denies them.
Imagine it this way: with term insurance, it is not you who gets covered but your family. In fact, you are buying them the peace of mind. Peace of mind is what only comes when you know that the company will be the one to pay the money that is needed. This is the reason that the claim settlement ratio check must be your top priority.
Come on, let us take a closer look at it. A company with a high claim settlement ratio is the one that proves the greatest number of claims to be legitimate and, accordingly, it grants compensation. On the contrary, a company with a low ratio may refuse a significant number of claims. And if your family is among those who got rejected, then the whole point of having term insurance is gone.
What is the Claim Settlement Ratio?
The claim settlement ratio (CSR) is a simple number that points out the percentage of claims paid by an insurance company in a year. For instance, if a company received 1,000 claims in a year and paid 980 of them, its ratio is 98%.
This number shows where the company stands in terms of its reliability. A high claim settlement ratio is indicative of a company that fulfils most of the claims. The lower the number, the higher the chances of rejection are.
Why is Claim Settlement Ratio So Important?
When you are alive, you may enjoy the tax benefits and peace of mind that term insurance gives. But after you are gone, only one thing matters, will the company pay your family the promised money?
The claim settlement ratio answers this question. It tells you the company’s past behavior. If they usually honor claims, chances are they will honor your family’s claim too.
This is why experts always say: Don’t just look at premium rates. A slightly higher premium with a company that has a very high claim settlement ratio is always better than saving a little money with a company that has a poor record.
Real-Life Example
Imagine two people, Rahul and Sneha.
Rahul buys a term plan from a company that offers very cheap premiums. But the company has a claim settlement ratio of 80%. When Rahul passes away, his wife applies for the claim. Sadly, her claim is rejected due to a technical reason. She now has no money to support her kids.
Sneha, on the other hand, buys from a company with a 98% claim settlement ratio. She pays a little extra every month. When she passes away, her husband files the claim. Within weeks, the insurance money is in his account. That money helps him manage household expenses, school fees, and loans.
This example shows how important it is to look beyond price and focus on trust and reliability.
How to Check Claim Settlement Ratio
The Insurance Regulatory and Development Authority of India (IRDAI) publishes this data every year. You can easily find it on their official reports or on reliable insurance websites.
When you compare insurers, look for companies with a ratio above 95%. These are usually considered safe and trustworthy.
Other Factors Matter, But This Comes First
Yes, there are many other things you should consider when buying term insurance — the coverage amount, riders, premium, and customer service. But all these come second.
Why? Because if the company does not pay your family, nothing else matters. Riders won’t matter. Low premiums won’t matter. Even a big cover won’t matter. That is why the claim settlement ratio should always be your #1 factor.
What is a Good Claim Settlement Ratio?
A ratio of 95% or above is usually very good. It shows that out of 100 claims, 95 or more are settled. A company with such a high ratio is far more reliable than one with 80% or 85%.
But don’t just look at the percentage. Also, check how many claims the company has handled in total. If a company has a high ratio but has only settled a few claims, it may not be as strong as a big company with thousands of claims settled every year.
Tips to Make Sure Your Family’s Claim is Accepted
While choosing a company with a high claim settlement ratio is very important, you must also do your part. Here are some simple tips:
- Be honest in your form. Mention all details about your health, lifestyle, and habits.
- Don’t hide health issues. Even small things like smoking should be declared.
- Keep documents ready. Share all necessary documents with your family so they know what to do.
- Pay premiums on time. If your policy lapses, the claim will be rejected.
By being careful, you can make sure your family’s claim is not denied.
Why Families Suffer Without It
Many families face trouble when the claim is denied. Imagine your loved ones already dealing with the pain of losing you, and then they also face money problems because the insurer did not pay.
This is exactly why you should never ignore the claim settlement ratio. It is not just a number; it is the trust your family can bank on.
Conclusion
When you buy term insurance, you are not just buying a policy. You are buying safety for your family’s future. And that safety is real only when the insurer is reliable.
The claim settlement ratio is the clearest sign of that reliability. So before you decide, always check it. Don’t let low premiums or fancy features distract you. A company that pays claims quickly and fairly is the right one for you.
So, remember: Buy term insurance only after checking the claim settlement ratio. It should always be your #1 factor, because in the end, nothing matters more than your family’s security and peace of mind.