Insurance is a contract between an individual and the insurer and choosing a company that we trust plays a key role for insurance as we trust the company to honor our claim in case if something happens to us and we also don’t want our family to suffer processing the claim. To avoid issues it is better to be cautious while choosing the insurance company when you are going for a long term commitment like Term Insurance, but let you be assured that Insurance Regulatory and Development Authority (IRDA) will there and can help people in processing their claims if the insurer is not cooperative or have denied the claim with no reason and all genuine claims will definitely be paid.
Things To Check To Choose Term Insurance Company
Choose Term Insurance Online
Online term insurance plans offer you low premiums by bypassing the agent route and office expenses where you will be passed the benefit of agent’s commission and other related expenses saving bucks for you. It’s just a myth spread the agents (for their commissions) that online policies will be facing issues at the time of claim settlement and to be clear all policies will treated with same weight age for claim proceedings.
Cheaper insurance doesn’t mean that cheap services and higher premium doesn’t guarantee better services, take the help of premium comparison portals and look for the company that offer better policy features among the ones that offer competitive premiums.
Term Insurance Policy Features (Explained)
These day’s insurance companies are offering many add-on’s like accidental rider, critical illness rider, waiver of premium rider, etc., we need to choose the best we are looking for that suits your own requirements, here are few of the features explained in detail to understand.
What is Accidental Death Benefit Rider?
With Accidental Death Benefit Rider the insured person will get additional death benefit along with sum insured amount if he/she dies due to an accident, for all other forms of death the regular sum insured is applicable.
What is Critical Illness Rider?
If opted for Critical Illness Rider and in case if the insured person met with any of the major diseases from the approved list of the policy contract a lump sum amount will be paid, rest of the terms of the term insurance will be same.
What is Waiver of Premium Rider?
In Waiver of Premium Rider the insured person will be waived with future payments in case if he/she is permanently disabled and the terms of the insurance will remain same, it’s just that the insured doesn’t need to pay any premiums for the rest of the tenure and still he will be protected as per the contract.
Claim Settlement Ratio (CSR)
Claim Settlement Ratio (CSR) can be one of the parameter to check the history of the company on how it fares while dealing with claims and it gives you fare idea about how a company will react to your claim but as the famous mutual fund company’s disclaimer “past performance is not an indicator of future performance” and you should not solely rely on the Claim Settlement Ratio as this will generally be newer for insurance companies that have started their operations in recent times.
Why Claim Settlement Ratio is Lower for New Insurance Companies?
Claim Settlement Ratio will be lower for new insurers primarily because of the early claims that they receive, consider a person who have taken a term insurance for Rs. 1 Crore and after 2 years he is dead because of heart attack, it is highly unlikely for a healthy person to expire in 2 years without any reason and for such claims (as allowed by IRDA) any claims before 3 years of taking the policy will be considered as early claims and the insurer can investigate deploying 3rd part agencies if the claim is really genuine, it is obvious that not all claims can be genuine in case of early deaths and hence the rate of rejection would be higher for early death claims.
So the insurance companies who have started the operations in recent times can only have early death claims and hence the higher rejection ratio. As the company gets older the claim settlement ratio will grow high.
For example consider the claim settlement ratio of Aegon Religare as released by IRDA for the last 5 years in the below chart, it is obvious that the claim settlement ratio will be increased over time and will be healthy for all companies and we have IRDA route in case of any issues.
|Claim Settlement Ratio of Aegon Religare|
I have written about the importance of tenure and the advantages and disadvantages of having long term, and why you should select long tenure for term insurance and here I am just reminding you again that it is always beneficial to choose the highest term offered by the insurer. I am not discussing (again) on why you should choose longer term, for more details refer the article linked above.
Between Us: Now I hope that you have fair idea on what to look for to choose term insurance company that is top and best for buying term insurance, please share your views on this and let me know which company you are going for taking term insurance. Let me know if you have any other questions in mind which I missed here and needs to be addressed.