Term insurance plan is a necessity for an individual who has dependents or a family. It is the basic form of life insurance where a fixed sum assured is paid on the death of the policyholder. In case of survival of policy term, the insured doesn’t get anything in return. It works on the basic principles of life insurance with maximum coverage at minimum cost with no additional benefits.
While looking for a term insurance policy, we generally always go with the company which gives the best deal in terms of the lowest insurance premium or give added benefits, ignoring a very essential aspect which is the claim settlement ratio of that company.Claim settlement ratio is the number of policies that are settled by paying back the claims in case of death as a percentage of claims made. High claim settlement ratio shows the insurer is reliable and could be trusted for taking term plans.
We must remember that a term plans comes into effect only due to the unforeseen/unfortunate & untimely death of the insured person & at this time of distress any settlement not made by the insurance company to the dependents would not only defeat the entire purpose of taking a term plan but also put the family in financial stress.
Let us look at the claim settlement ratio of term insurance providers according to IRDA in the year 2015-2016.
Insurance Provider | Death claims received | Claim settlement ratio | Death claims paid | Claims pending | Average value/claim (Rs) |
LIC | 7,55,901 | 98.19% | 7,42,243 | 0.50% | 1,20,654 |
Max Life | 9,223 | 96.23% | 8,804 | 0.10% | 2,78,816 |
ICICI Prulife | 12,309 | 96.20% | 11,546 | 0.80% | 3,05,612 |
SBI Life | 14,876 | 95.70% | 13,303 | 3.20% | 2,29,572 |
AegonReligare | 460 | 95.30% | 413 | 0.20% | 7,44,068 |
HDFC Std | 12,189 | 95.02% | 11,031 | 2.30% | 2,38,890 |
Reliance Life | 18,142 | 95.01% | 15,211 | 5.80% | 1,50,726 |
Tata AIA Life | 3,873 | 94.47% | 3,659 | 1.00% | 2,41,241 |
Star Union Daichi | 1,266 | 94.08% | 1,191 | 0.30% | 2,85,306 |
Canara HSBC | 576 | 92.99% | 516 | 3.10% | 5,58,333 |
PNB MetLife | 2,466 | 92.90% | 2,290 | 1.50% | 4,48,821 |
Bajaj Allianz | 20,661 | 91.30% | 18,978 | 3.00% | 1,83,291 |
Kotak Mahindra Life | 2,686 | 90.73% | 2,437 | 3.20% | 2,96,143 |
Future Generali | 2,160 | 90.61% | 1,808 | 1.80% | 1,71,128 |
Sahara Life | 778 | 89.97% | 700 | 3.60% | 91,143 |
Birla Sunlife | 8,436 | 88.45% | 8,055 | 1.70% | 3,45,241 |
Exide Life | 3,432 | 86.10% | 2,955 | 1.60% | 2,03,519 |
Edelweiss Tokio | 119 | 85.10% | 68 | 5.00% | 10,64,706 |
IDBI Federal Life | 1,017 | 84.79% | 736 | 4.30% | 4,26,902 |
Aviva Life | 1,690 | 82.00% | 1,396 | 0.50% | 7,68,266 |
Bharti AXA Life | 1,112 | 80.00% | 900 | 2.90% | 3,94,667 |
India First Life | 1,655 | 72.21% | 1,195 | 5.00% | 2,49,540 |
Shriram Life | 1,960 | 65.66% | 1,307 | 11.20% | 2,53,481 |
DHFL Pramerica | 953 | 57.19% | 545 | 6.50% | 2,74,128 |
*Source IRDA/Policybazar.com
Looking at the Claim settlement ratios of various companies it is clear that LIC of India, Max Life, ICICI Pru Life & SBI Life have the best claim settlement ratios & thus the possibility of claims being settled to your dependents are maximum.
Make life insurance an integral part of your financial plan….
Sabyasachi Paul has been associated with equity research and advisory on equity markets in India for over 9 years & currently heads the equity research desk of Eastern Financiers Ltd, Kolkata.He also manages a portfolio on the online platform Kristal. Find link to the strategy named ‘The Tortoise’