Always Check Settlement Record Before Purchasing A Cover

The majority people ask over concerning returns, premiums, guaranteed or otherwise, tax breaks before purchasing a life insurance policy. Because for most of the people, the main reason of purchasing life insurance policy during the first 3 months yearly is an exercise in planning of the tax, it fits the bill in that perspective.

Hardly ever, do people really bother to inquire whether the insurance firm can be trusted to make a claim. Sarcastically, this is the most significant feature of an insurance company’s products. However, that is the main role of a life insurance plan - providing financial safety to the dependents of the policy owner on, if the policy owner dies.

Know The Claim Track Record 

To be reasonable, very few know the parameter to be used to determine the insurance company's reliability when it comes to approving claims. Furthermore, it is very improbable that your agent will help you by sharing these details, except his insurance company has a stupendous track record of settling claims.

Hence, how do you attain your hands about this key parameter? Well, for starters, you can consult with the annual report of Insurance Regulatory and Development Authority (IRDA) for the tenure of 2010-11, which was released recently. The IRDA has also put the annual report of 2010-11 on its website. So, you can also browse the details from IRDA website. The report lists claim repudiation, pending ratios and settlement for all life insurers, every year.

Though a systematic research would require studying these ratios for a longer time-period, yet data of a year, is not bad to start with. The statistics sheet may look complex, but all you need to do is concentrate on the mentioned, percentages in brackets, for every company. For example, Life Insurance Corporation's claim settlement ratio is more than 97%.

Life Insurance Corporation's track record can be said to be very excellent, especially because the public sector giant processed more than 7 Lakh claims in a particular year. Several private sector firms, in comparison, have a dismal ratio of around 50 percent, in spite of managing just a few hundred claims.

The Sole Criterion

The easiest way to select a plan seems to be to purchase one from the firm that has the best, or at least sky-scraping, claim settlement ratio. Though, it may not be completely accurate to go blindly by this statistics point alone.

Go Deeper Than Mere Numbers 

Subsequently, of course, there are additional parameters that relate to the policy owner themselves that are to be considered. Let us illustrate through an example, comprehensiveness of the insurance policy cover, its cost-effectiveness and, if it features an investment element, the returns track record too.

An 'Acceptable' Ratio 

These days, it is rather feasible that upon analysis, you discover that the firm with the best claim settlement track record does not provide a product that suits your requirements. Otherwise, it is also possible, that the premiums charged merely do not fit into your financial plan.

In this situation, can an insurance seeker search for an insurance firm with a claim settlement ratio of more than 80%? Or can 90% be the least amount threshold intensity for the purpose? The solution, then, may be to hit a balance and search for the best possible option.

Factor In Claims Pending Ratio 

In addition to the repudiation ratios and claim settlement, claim pending ratio is also to be taken into consideration. The statistic comes as an outcome after deducting settled claims, written back as well as discarded from the overall claims filed.

Moreover, the firms age could be more relevant here than on the claim dismissal. In short, you would do well to implement a holistic approach and analyze all criteria before taking a final resolution.