Life is uncertain. We all struggle hard to take care of our families, but we don’t know what tomorrow holds. That’s why a majority of individuals opt for term life insurance to ensure that their loved ones are financially secure even if they are not present.
But purchasing any term policy is not sufficient. You need to see how good the insurance company is at settling claims. There is an easy way to get to know this by checking the Claim Settlement Ratio (CSR). Let’s see why this figure matters so much and how it impacts you while selecting term insurance.
What Is Claim Settlement Ratio?
The Claim Settlement Ratio reports to you how many claims the insurance company pays out versus how many it receives within a year.
- Example: If an insurer has 100 claims per year and pays out 96 of them, its CSR is 96%.
- A high CSR indicates that the company has a good record of paying its customers.
- Low CSR could indicate higher claim rejections or delays.
It is like a report card for the insurer, showing how trustworthy they are when it comes to paying your family in their time of need.
Why CSR Matters When You Buy Term Insurance
When you buy term insurance, you are not purchasing it for yourself; you are purchasing it for your family’s future. After all, you will no longer be available when the claim is raised. Therefore, you need to pick a company that your family can believe in.
This is where the claim settlement ratio comes into play. An organisation with a high CSR reassures you that your family will not encounter financial hardship due to claim rejection or delay.
For instance:
- A 97% CSR company is more trustworthy than an 85% company.
- Higher CSR = greater likelihood your family will receive the money promptly and hassle-free.
How CSR Affects Your Family’s Financial Security
Think about this: your family depends on you for daily expenses, children’s education, loan repayments, and future dreams. If something happens to you, they will rely on the term insurance payout to manage their lives.
If the insurer has a good claim settlement ratio, the process is usually smoother and faster. Your family gets the money on time and can continue life without financial stress.
However, if the insurer also has a bad CSR, then rejection or delay becomes a risk. That adds emotional and financial pressure when your loved ones are already suffering. Therefore, selection of an insurer with high CSR is as vital a consideration as the selection of the right sum assured.
Should You Only Consider CSR While Purchasing Term Insurance?
Although CSR is significant, it must not be the sole consideration:
- Premium affordability: Select a policy that you can afford to pay for annually with ease.
- Claim processing time: Some firms have good CSR but take more time to settle claims. Compare average claim settlement time.
- Policy features: Seek flexibility, riders (such as critical illness, disability), and coverage benefits.
- Customer service: A company with friendly support facilitates the claim process for your family.
How to Check Claim Settlement Ratio?
It’s as easy as that. Each year, a report including the CSR of all the insurance companies is published by the Insurance Regulatory and Development Authority of India (IRDAI). You can see it online for free.
Steps:
- Go to the official IRDAI website.
- Get the annual report for life insurers.
- Find the “Claim Settlement Ratio” table.
Many insurers put their CSR on their websites or brochures as well.
Common Misunderstandings About CSR
- High CSR Equals 100% Payment Guarantee
False. Just because an insurer enjoys 99% CSR, it does not guarantee that your claim will never be denied. Claims could be denied if the policyholder provides incorrect information, conceals medical history, or fails to pay premiums.
- CSR Is the Only Thing That Matters
CSR is significant but not the sole factor to be considered. Even if a policy has the lowest premium, if the company does not have good customer service or complex procedures, it could still not be the best option.
- CSR Is The Same Every Year
No, CSR can differ from one year to another. That is why you must check it periodically, especially when you are buying a new policy or recharging coverage.
Tips to Ensure Seamless Claim Settlement for Your Family
Even if you select a company with a high CSR, you should also:
- Provide full and accurate information while purchasing the policy (such as medical history, smoking habits).
- Pay premiums regularly to maintain your policy.
- Update nominee information so the money reaches the right individual.
- Notify your family where policy documents and insurer contact information are stored.
Real-Life Example: Why CSR Can Change Lives
Let’s consider an example of two families:
- Family A selected a company with a 98% claim settlement ratio. When they registered a claim upon a mishap, it got settled in 12 days without any problem. They were able to settle their home loan and afford expenses.
- Family B went for a company with an 82% claim settlement ratio because they had a slightly lesser premium. Sadly, their claim was held up for months because of delays in verification of documents. They had to take advances for survival.
This illustrates how a single choice, verifying the claim settlement ratio, can alter the financial future of your family.
Conclusion: Your Family Warrants Trustworthy Protection
A term insurance policy is one of the finest presents you can present to your loved ones. However, possessing a policy is only half the battle won. Having the right insurer with a solid claim settlement ratio guarantees that your family receives adequate financial assistance at the time of need.
Therefore, before you purchase term insurance, compare premium prices merely till you just take a glance at the CSR and overall reputation of the insurer. Because ultimately, term life insurance is all about trust, and the claim settlement ratio allows you to gauge that trust.
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