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Why does Everyone Keep Emphasizing Claim Settlement/Paid Ratio in Life Insurance?

A life insurance plan is the most critical part of a financial portfolio

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A life insurance plan is the most critical part of a financial portfolio. It provides financial safety to your family in case something unfortunate comes your way. The policy also acts as a promise to your loved ones that their financial needs will be taken care of, even in your absence.

Moreover, life insurance helps facilitate your long-term savings, assists in planning for various stages of life and provides tax benefits. While buying a policy is imperative, the problem arises when choosing the one that gives you value for your money.

Many insurance companies provide insurance policies with different features and benefits. But, before going into the advantages and features, it is essential that you check the background of the insurer. One of the most adept ways to do that is by checking the insurer's claim paid ratio (or claim settlement ratio).

What is Claim Paid Ratio (Claim Settlement Ratio)?

Claim settlement Ratio or Claim Paid Ratio can be defined as the number of claims cleared by the insurer in a period.

Claim Paid Ratio = (No. of death claims settled/No. of death claims received) x 100

The ratio acts as an objective yardstick to find the insurer’s reliability. It is one of the most indispensable factors to consider before selecting an insurance policy because if the claim is not honoured, purchasing an insurance policy becomes redundant.

Why is Claim Paid Ratio Important?

You purchase a life insurance policy with a singular thought that it will provide financial protection to your family after your demise. But, what if your family is not provided with the insurance proceeds after your death? What if the claim never gets settled?

Moreover, if your beneficiaries depend entirely on the insurance proceeds, the unsettled claim can be a huge financial setback. Therefore, you must check the claim paid or settlement ratio of the company from which you purchased your policy.

With the launch of online insurance policies and sites offering you the option of comparing plans online, you might get persuaded by the low prices shown. In this advent, if you remember to compare the claim paid ratio (claim settlement ratio), your well-planned insurance policy might be well-spent. Companies with a low claim paid ratio have a way of not honouring their claim processing.

So, choose insurers that offer you with the guarantee of providing your sum assured to your family through their past performances.

What does Claim Paid Ratio Indicate?

A claim paid ratio or claim settlement ratio indicates the number of claims settled by an insurer. This means, if an insurer has a claim settlement ratio of 90%, then that insurance company has paid 90 percent of the claims that were made.

How can You Check the Claim Paid Ratio?

Every year, the IRDA (Insurance Regulatory and Development Authority) publishes an annual report on the workings of the insurance industry. The report contains various details on the performance of insurance companies in the country, such as

1. The number of policies sold by the insurer

2. Amount of premium obtained in a policy year

3. The claim paid ratio (claim settlement ratio) of the last year

There is no refuting the fact that you might find policies attractive on their features and benefits. But remember if a plan is not meeting your needs and providing you value for money, then purchasing it becomes worthless.

Buying a plan because of its low cost and ignoring the fact that the company has a low paid ratio (claim settlement ratio) can cost heavily to your dependents.

So, whenever you plan to purchase a life insurance policy do consider the claim paid ratio (claim settlement ratio) as a deciding parameter. It will help you in keeping your promise of protecting your family even after you are gone.

Why is Max Life's Claim paid Ratio Competitive?

A hassle-free claim settlement process is something every policyholder wants. Max Life ensures that their beneficiaries do not have to run from pillar to post to get the insurance proceeds.

Max Life Insurance claim paid ratio is  99.51% for FY 22-23.

(Source: Individual Death Claim Paid Ratio as per audited financials for FY 2022-2023)

The InstaClaim process provided by Max Life Insurance ensures that your nominee receives the sum assured within a day. Once the nominee submits the claim settlement form that meets all the specific terms and conditions, the claim is processed within a day. The terms and conditions include:

1. Sum assured should be below Rs. 1 crore

2. The insurance policy has been active for at least three years

3. All the crucial documents must be submitted before 3 pm on any working day at our Office

4. There must be no need for field verification

For cases which warrant field verification, Max Life Insurance will pay the claim in 5 working days after the receipt of all mandatory documents. Otherwise, Max Life Insurance will pay an interest on the death claim amount for every day of delay beyond 5 working days. 

All claims that qualify instaClaim will be paid within 1 working day from the date of submission of mandatory documents else Max Life Insurance will pay interest at Bank rate as at the beginning of the financial year in which claim has been received (4.65% p.a. for FY’20-21) for every day of delay beyond 1 working day.

ARN: Oct23/Bg/10C

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